NEP SUPERSHOOTERS: Moody's Rates $76 Million Term Loan at B1NEW ENGLAND: Moody's Affirms Long-Term Rating at Ba2NEW WORLD: Has Until July 5 to Make Lease-Related DecisionsNOVOSTE CORP: Considering Liquidation as One of Many OptionsOCEANVIEW CBO: Moody's Junks $2 Million Fixed Rate Debt Rating

AIR CARGO: U.S. Trustee Appoints 7-Member Creditors Committee------------------------------------------------------------- The United States Trustee for Region 4 appointed seven creditors to serve on the Official Committee of Unsecured Creditors inAir Cargo, Inc.'s chapter 11 case:

Official creditors' committees have the right to employ legal andaccounting professionals and financial advisors, at the Debtors'expense. They may investigate the Debtors' business and financialaffairs. Importantly, official committees serve as fiduciaries tothe general population of creditors they represent. Thosecommittees will also attempt to negotiate the terms of aconsensual chapter 11 plan -- almost always subject to the termsof strict confidentiality agreements with the Debtors and othercore parties-in-interest. If negotiations break down, theCommittee may ask the Bankruptcy Court to replace management withan independent trustee. If the Committee concludes reorganizationof the Debtors is impossible, the Committee will urge theBankruptcy Court to convert the Chapter 11 cases to a liquidationproceeding.

The B1 senior implied rating reflects the highly levered capital structure of ACS, even after the proposed refinancing as the benefits of the debt reduction from the equity offering are largely offset by the October 2004 implementation of a substantial dividend payout program. While Moody's considers the company's liquidity to be sufficient over the ratings horizon of the next two years, the negative outlook continues to reflect Moody's concerns that, absent material improvements in cash flows, liquidity will erode and the ratings are likely to fall should the cash flow benefits of the company's current capital spending program not materialize and future capital spending requirements be underestimated by management.

Alaska Communications is an integrated telecommunications operator providing local telephone service as the incumbent in most of the state (including the largest population centers of Anchorage, Juneau and Fairbanks), as well as wireless, data and long distance services across the state. From 2001 through 2003, Alaska Communications did not generate enough cash provided by operations to cover its capital spending, as the company expanded its wireless network and implemented its long distance and data services strategy. While ACS was essentially free cash flow neutral for the first nine months of 2004, going forward Moody's expects ACS to consume the majority of the cash on its balance sheet due to dividend payouts as well as continued capital spending above what ACS considers to be maintenance levels in 2005 and 2006, to further build-out its CDMA wireless networks and to purchase IRU fiber capacity to the lower 48 states. In 2007, the company expects capital spending to decline closer to maintenance levels and to achieve positive free cash flow after dividends.

To achieve this goal, however, EBITDA must increase and capital spending must decline. Moody's is concerned that EBITDA increases will be difficult to achieve in the very competitive Alaskan communications market, particularly due to softness in the local and long distance lines of business. Local retail access lines declined 5.6% in 3Q04 compared to 3Q03, and local telephone revenues declined 3.8%. ACS does benefit from a relatively benign competitive environment for its wireless services with only one other network-based competitor in Alaska. ACS has grown its wireless subscriber base almost 14% in 3Q04 over 3Q03, and wireless ARPU has also grown almost $4/month to $47.43 in that period. For the company to achieve its targets, wireless operations must continue to grow subscribers at double-digit rates with ARPUs continuing to expand as well.

For the rating outlook to stabilize, Moody's must become more confident that ACS can continue to profitably grow its wireless business at such a rapid pace to offset the slower erosion of its wireline business. If the benefits of the company's current capital spending plan do not yield growth in operating cash flows and future capital spending requirements do not moderate, leading Moody's to believe that the company will not become free cash flow positive in 2007, the ratings are likely to be lowered.

The B1 rating on the proposed $385 million senior secured credit facilities reflects their large share in the company's capital structure at over 70% of total debt pro forma for the proposed refinancing. Moody's considers these lenders to be well protected through their collateral and guarantee package from all subsidiaries of the borrower. These lenders further benefit from a dividend suspension covenant that will block payment of common dividends if ACS fails to meet a leverage ratio test. The B2 rating for the company's senior unsecured debt incorporates the effective subordination of this claim to the substantial amount of secured bank debt, but also the perceived benefits ascribed to the upstream guarantees received from the company's operating subsidiaries. The downgrade of the issuer rating reflects Moody's opinion of the senior unsecured and unguaranteed risk of the company. With the expected removal of the existing subordinated notes, which had an upstream guarantee, the issuer rating no longer reflects the benefits of any guarantees.

Based in Anchorage, Alaska Communications Systems Holdings, Inc., is an integrated telecommunications provider with approximately 200,000 retail local access lines, 100,000 wireless subscribers, and LTM revenues of $304.9 million.

ALLEGHENY ENERGY: Asks Court to Rule on Environmental Dispute-------------------------------------------------------------Subsidiaries of Allegheny Energy, Inc. (NYSE:AYE) asked a United States court in West Virginia to declare that their coal-fired power plants are in compliance with the federal Clean Air Act.

Allegheny Energy Supply Company, LLC, and Monongahela Power Company are seeking a declaratory judgment against the attorneys general of New York, New Jersey and Connecticut, who filed a notice of intent to sue Allegheny in May 2004. In that notice, the attorneys general alleged that the Allegheny companies undertook maintenance projects at power stations in Pennsylvania and West Virginia in violation of the Clean Air Act. Allegheny believes that its actions were within the law. In the action disclosed Thursday, Allegheny has requested the court to rule in an effort to resolve the matter.

"We believe that over the years we have fully complied with all applicable laws and regulations," said Paul Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. "After eight months of discussions, we believe it's time to seek the clarity that only a court can provide on these issues.

"We remain committed to reducing absolute emissions at our plants, but our financial condition limits our options. That's why we are working actively with the states of West Virginia and Pennsylvania to find a way to improve the environment sooner than we could on our own," Mr. Evanson added.

The Allegheny subsidiaries filed their legal action in the U.S. District Court for the Northern District of West Virginia because most of the power stations at issue are located there, as are more than 700,000 Allegheny customers.

Headquartered in Greensburg, Pa., Allegheny Energy -- http://www.alleghenyenergy.com/-- is an energy company consisting of two major businesses: Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio.

* * *

As reported in the Troubled Company Reporter on Sept. 14, 2004, Fitch Ratings revised the Rating Outlook of Monongahela Power Company to Stable from Negative and affirmed existing ratings of Allegheny Energy, Inc., and its subsidiaries. Fitch rates many layers of Allegheny debt obligations and preferred stock issues in the double-B and single-B range.

ARGUS CORP: Needs More Funds to Pay Preferred Dividends-------------------------------------------------------Argus Corporation Limited (TSX:AR.PR.A)(TSX:AR.PR.D)(TSX:AR.PR.B) owns or controls 61.8% of the Retractable Common Shares of Hollinger, Inc. Hollinger in turn owns 68% of the voting shares and 18.2% of the equity of Hollinger International, Inc.

As the shares Argus owns of Hollinger are the primary asset held by Argus and the shares of International in turn are the primary asset held by Hollinger, this Report includes certain updates regarding each of Hollinger and International.

Argus filed its 2003 audited financial statements on a market valuation basis as it had historically which was then in compliance with GAAP.

However, Argus is now required to consolidate its financial statements with those of Hollinger for fiscal periods beginning after January 1, 2004 due to a change in GAAP.

As a result of the change in accounting policy, Argus has been unable to prepare financial statements in compliance with GAAP for each of the first three Quarters of 2004. Argus has instead provided its bi-weekly reports.

In order to inform the marketplace of key economic developments, Argus has additionally prepared and released financial statements for the first three Quarters of 2004. These statements have been presented as alternative financial information and were appended to its Reports dated August 19 and November 12, 2004.

Argus will be unable to prepare financial statements consolidated with those of Hollinger and bring its financial reporting up to date until Hollinger has prepared its financial statements. Argus is however unable to determine when it may complete its financial statements consolidated with those of Hollinger.

Argus' intention is to prepare consolidated financial statements with those of Hollinger as soon as practicable after Hollinger files its statements.

Argus presently contemplates, however, that it will need to continue to file additional financial statements that are not consolidated with those of Hollinger for current and upcoming financial periods on an alternative financial basis.

Financial Position of Argus

Argus had Cdn. $263,950 of cash as of the close of business on January 7, 2005.

Argus indirectly owns 21,596,387 Retractable Common Shares of Hollinger with a market value at the close of trading on January 7, 2005 on the Toronto Stock Exchange of Cdn. $6.60 per share or an aggregate of Cdn. $142,536,154.

The market value of its shareholdings is subject to the minority interest of The Ravelston Corporation Limited, the parent of Argus. 11,862,342 of the Shares, being approximately fifty-five percent of the Shares, are owned by a subsidiary of Argus in which Ravelston has a significant minority interest.

The amount of that minority interest was stated to be $20,585,670 in the financial statements that Argus publicly filed as alternative financial information as at September 30, 2004.

Argus has further set out a liability for an amount on account of future income taxes on unrealized net capital gains. The amount of that liability was stated to be $14,793,176 in Argus' alternative financial information as at September 30, 2004.

Dividends

Argus will require additional funds to be able to continue to pay dividends on its Class A and Class B Preference Shares on an uninterrupted basis, including an additional amount of approximately $251,703 for dividends that are scheduled to be paid on February 1, 2005.

Argus intends to make efforts to ensure that such dividend payments can be made on February 1, 2005, and continue to be made thereafter on an uninterrupted basis.

The proposed going private transaction is to be structured as a share consolidation and retirement of Hollinger's shares held by parties other than by Argus and Ravelston directly and indirectly.

On November 16, 2004, Ravelston announced that it will support the proposed privatization on the basis that holders of Shares (other than Ravelston and certain of its affiliated entities including Argus) would receive Cdn. $7.25 in cash for each Share held by them and holders of Series II Preference Shares of Hollinger would receive 0.46 of a share of Class A Common Stock of International for each Series II Share held by them.

No further terms have yet been announced.

The Hollinger going private transaction would result in Argus holding a greater percentage of the Shares of Hollinger. Hollinger would then be a private company without the public company liquidity that currently exists.

Argus will review and consider whether the terms of the proposal are acceptable when they are announced. Argus' Independent Committee comprised of Jonathan H. Marler and Robert E. Tyrrell will retain the independent professional advisers as it deems necessary and make recommendations to the Board of Directors of Argus.

Hollinger has established a Privatization Committee to review the proposed transaction. That committee has retained independent financial and legal advisors to assist it.

Based on the company's alternative financial reporting, as ofSeptember 30, 2004, Argus has a $44,034,263 stockholders' deficit compared to $6,522,159 positive equity at Dec. 31, 2003.

ATHEROGENICS INC: Prices $175 Million Convertible Debt Offering---------------------------------------------------------------AtheroGenics, Inc., (Nasdaq: AGIX), reported the pricing of $175 million aggregate principal amount of its Convertible Notes due 2012 in a private placement to qualified institutional buyers, pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended. The notes will bear interest at a rate of 1.5% per annum and be convertible into shares of AtheroGenics' common stock at an initial conversion rate of 38.5802 shares of common stock per $1,000 principal amount of notes, subject to adjustment (equivalent to a conversion price of approximately $25.92 per share and a conversion premium of approximately 35% to the last reported sale price of $19.20 per share on January 6, 2005).

AtheroGenics may not redeem any of the notes prior to maturity. Upon the occurrence of certain designated events prior to the maturity of the notes, subject to specified exceptions, investors will have the right to require AtheroGenics to redeem the notes. AtheroGenics has granted the initial purchasers of the notes an option to purchase up to an additional $25 million aggregate principal amount of the notes. The offering is expected to close on January 12, 2005.

AtheroGenics expects to use the proceeds of the offering to fund the ongoing costs of the ARISE trial of AGI-1067 and other research and development activities, including clinical trials, process development and manufacturing support, and for general corporate purposes, including working capital.

The notes and the shares of common stock issuable upon conversion of the notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

AtheroGenics, Inc., (Nasdaq: AGIX) is a pharmaceutical company focused on the treatment of chronic inflammatory diseases.

As of September 30, 2004, the company had an $18,839,547 stockholders' deficit, compared to a $30,377,006 in positive equity at December 31, 2003.

BM USA INC: Emerges from Chapter 11 Protection----------------------------------------------BM USA Incorporated, (the U.S. subsidiary of Bruno Magli S.p.A., the Italian luxury shoemaker whose primary investor is the Bulgari-sponsored private equity fund, Opera) emerged from Chapter 11 protection on Jan. 6, 2005. The Company officially concluded its reorganization process after completing all required actions and conditions to its Plan of Reorganization, which was confirmed by the U.S. Bankruptcy Court for the Eastern District of Texas by order dated November 9, 2004.

About BRUNOMAGLI S.p.A.

BRUNOMAGLI S.p.A., interprets the luxury of Italian style through its exceptionally fine handcrafted shoes and accessories. The label offers its sophisticated and fashion conscious clientele seductive selections of extraordinary comfort and style that is contemporary and innovative.

About Opera

Opera, the Bulgari sponsored private equity fund, is the first investment company to focus on Made in Italy manufacturing and service companies, where being Italian lends a competitive edge. Opera invests in companies with a secure product equity and a successful brand name that are in need of management and financing support. An investment vehicle funded by Opera acquired a majority interest in BRUNOMAGLI S.p.A., and since early 2002 has been involved in the strategic oversight of the Company.

Headquartered in Carlstadt, New Jersey, BM USA Incorporated is engaged into a business of crafting shoes that began in Bologna, Italy in the 1930's in a family-owned and operated basement workshop. The Company, together with two of its affiliates, filed for chapter 11 protection on April 14, 2004 (Bankr. E.D. Tex. Case No. 04-41816). J. Mark Chevallier, Esq., and David L. Woods, Esq., at McGuire, Craddock & Strother represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated over $10 million in total debts and assets.

BURNS EQUPMENT: Disclosure Statement Hearing Set for Jan. 18------------------------------------------------------------ The Honorable David H. Adams of the U.S. Bankruptcy Court for the Eastern District of Virginia will convene a hearing at 11:00 a.m., on January 18, 2005, to consider the adequacy of the Amended Disclosure Statement explaining the Amended Plan of Reorganization filed by Burns Equipment Company, Inc.

The Debtor filed its Amended Disclosure Statement and Amended Plan on November 23, 2004.

The Plan proposes to pay secured creditors the fair market value of their collateral and unsecured creditors the aggregate amount of $450,000, which represents an estimated distribution of between 40% and 50%. These percentages are based upon an unsecured claims base of approximately $10 million.

General unsecured claims are divided into two classes, Administrative Convenience Claims of $1,000 or less and all other remaining Unsecured Creditors.

The Plan groups claims and interest into eight classes and provides for these recoveries:

a) Class 1 impaired claims of the Komatsu Financial Corporation Allowed Claims will be paid in full and entitled to retain its lien on the Komatsu Collateral pending a sale of any equipment in the Komatsu Collateral;

b) Class 2 impaired claims consisting of the Caterpillar Financial Services Allowed Claims will be paid in full and entitled to retain its liens on the Caterpillar Collateral pending a sale of any equipment in the Caterpillar Collateral;

c) Class 3 impaired claims consisting of the Burris Construction Company will be paid with the Debtor's surrender to Burris Construction of its Suffolk Property in full satisfaction of their claims;

d) Class 4 impaired claims consisting of the Gateway Bank & Trust Allowed Claims will be paid in full and retain its liens pending the sale of any equipment included in the Gateway Collateral;

e) Class 5 impaired claims consisting of the CitiGroup/Equipment Financing Allowed Claims will be paid in Full and entitled to retain its lien on its collateral pending a sale of the collateral;

f) Class 6 impaired claims consisting of the Bank of Hampton Roads Allowed Secured Claims will be paid in full and entitled to retain its liens on its collateral pending a sale of the collateral;

g) Class 7 impaired claims consisting of all Allowed Unsecured Claims holding amounts equal to or less than $1,000 will be paid in full with a lump sum payment equal to or less than $1,000; and

h) Class 8 impaired claims consisting of all Allowed Unsecured Claims other than the Class 7 claims will receive on the Effective Date, an Unsecured Creditors Note that provides payments of equal to those creditors' Pro Rata share of $25,000 per month.

Full-text copies of the Amended Disclosure Statement and Amended Plan are available for a fee at:

Objections to the approval of the Disclosure Statement, if any, must be filed and served on or before Thursday, Jan. 13, 2005.

Headquartered in Chesapeake, Virginia, Burns Equipment Company, Inc., sells machines, equipment and equipment parts. The Company filed for chapter 11 protection on June 29, 2004 (Bankr. E.D. Va. Case No: 04-74024). John D. McIntyre, Esq., at Willcox & Savage, P.C., represent the Debtors in their restructuring efforts. When the Company filed for bankruptcy protection, it reported $1,328,750 in total assets and $4,636,287 in total debts.

CENTENNIAL COMMS: Nov. 30 Balance Sheet Upside-Down by $517.9 Mil.------------------------------------------------------------------Centennial Communications Corp. (NASDAQ: CYCL) reported income from continuing operations of $18.6 million, or earnings per diluted share from continuing operations of $0.18, for the fiscal second quarter of 2005. This includes a $9.6 million after-tax gain related to the Company's sale of Midwest spectrum and compares to a loss from continuing operations of $2.0 million, or $0.02 per diluted share in the fiscal second quarter of 2004. Adjusted operating income from continuing operations for the fiscal second quarter was $89.8 million, as compared to $76.3 million for the prior year quarter.

"Centennial continues to deliver robust growth by tailoring the customer experience in each of its local markets," said Michael J. Small, Centennial's Chief Executive Officer. "These financial results demonstrate our ongoing ability to execute in a rapidly changing and evolving market."

Centennial reported fiscal second-quarter 2005 consolidated revenue from continuing operations of $214.1 million, which included $98.0 million from U.S. wireless and $116.1 million from Caribbean operations. Consolidated revenue from continuing operations grew 12 percent versus the fiscal second quarter of 2004.

-- On October 4, 2004 the Company announced that it purchased 10 MHz of spectrum from AT&T Wireless for $19.5 million, covering an aggregate of approximately 4.1 million population equivalents (POPs) contiguous to its existing properties in the Midwest. In addition, the Company simultaneously completed its sale of a portion of this spectrum to Verizon Wireless for $24 million. The net effect of these transactions is approximately 2.2 million incremental POPs acquired and $4.5 million cash received. The Company expects to launch service in the Grand Rapids and Lansing, Michigan markets in the spring of 2005.

-- On December 28, 2004, the Company completed the sale of its Puerto Rico cable television properties to an affiliate of Hicks, Muse, Tate & Furst Incorporated for approximately $155 million in cash. The net proceeds from the transaction will be used to fund ongoing capital requirements.

-- On December 28, 2004, the Company also announced the redemption of $115 million aggregate principal amount of its $300 million outstanding 10-3/4 percent Senior Subordinated Notes due December 15, 2008. The redemption will occur on or about January 27, 2005 at a redemption price of 103.583 percent.

Centennial Segment Highlights

U.S. Wireless Operations

-- Revenue was $98.0 million, an 8 percent increase from last year's second quarter. U.S. wireless revenue included $4.3 million in Universal Service Fund (USF) support. Retail revenue grew by $2.8 million a 4 percent year-over-year increase. Roaming revenue increased 3 percent from the prior year quarter as a result of the Company's launch of global system for mobile communications technology in all of its markets.

-- AOI was $41.5 million, a 17 percent year-over-year increase, representing an AOI margin of 42 percent. AOI was favorably impacted by $4.3 million in USF support during the quarter. Solid retail operations contributed to AOI growth during the quarter, as retail AOI margins grew by approximately 1 percent from the year-ago quarter. AOI was also positively impacted by growth in roaming revenue.

-- The Company ended the quarter with 544,900 U.S. wireless subscribers, which compares to 548,200 for the year-ago quarter and 551,400 for the previous quarter ended Aug. 31, 2004.

-- Capital expenditures were $16.2 million as U.S. wireless continued to invest in its network and completed the GSM overlay of the Company's Southeast footprint.

Caribbean Wireless Operations

-- Revenue was $85.8 million, an increase of 13 percent from the prior-year second quarter, driven primarily by solid subscriber and minutes-of-use growth.

-- Average revenue per user (ARPU) declined during the quarter primarily due to the continued impact of strong prepaid subscriber growth in the Dominican Republic. A changing postpaid rate plan mix in Puerto Rico also negatively impacted ARPU due to the Company's marketing of rate plans designed to reduce churn.

-- Switched access lines totaled approximately 56,500 at the end of the fiscal second quarter, an increase of 11,400 lines from the prior year quarter. Dedicated access line equivalents were 230,100 at the end of the fiscal second quarter, a 16 percent year-over-year increase.

-- Wholesale termination revenue was $5.6 million, a 48 percent year-over-year increase, primarily due to an increase in southbound terminating traffic to the Dominican Republic.

-- Capital expenditures were $7.8 million for the fiscal second quarter.

Revised Fiscal 2005 Outlook

-- The Company projects growth in consolidated AOI from continuing operations to be at the high end of its previously announced 7-12 percent range for the full fiscal year 2005 over fiscal year 2004. Consolidated AOI from continuing operations for fiscal year 2004 was $315.5 million.

The Company has not included a reconciliation of projected AOI because projections for some components of this reconciliation are not possible to forecast at this time.

-- The Company is announcing a network replacement and upgrade primarily impacting its wireless network in Puerto Rico. The upgrade, which is expected to cost $15 million in fiscal 2005, will improve the network's performance and quality while also reducing future operating expenses and capital expenditures. The net book value of the network equipment to be retired is approximately $65-$75 million, which the Company expects to depreciate over the next two fiscal quarters. The Company estimates that the after-tax payback period for this project will be approximately one year.

As a result of this network upgrade, the Company now expects capital expenditures of approximately $170 million for fiscal year 2005, net of a $5 million reduction due to the Company's sale of its cable television operations. This is an increase from the Company's previous target of $160 million. As previously disclosed, this outlook also includes approximately $25 million for the build-out of new markets in Grand Rapids and Lansing, Michigan.

In consideration of the network replacement and upgrade in Puerto Rico, the Company is evaluating the useful lives of its U.S. and Caribbean wireless network equipment based on industry, competitive and technological developments.

About the Company

Centennial Communications (NASDAQ: CYCL), based in Wall, N.J., is a leading provider of regional wireless and integrated communications services in the United States and the Caribbean with over 1 million wireless subscribers. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Caribbean business owns and operates wireless networks in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. For more information regarding Centennial, visit the Company's websites at http://www.centennialwireless.com/http://www.centennialpr.com/and http://www.centennialrd.com/

CITYSCAPE HOME: S&P's Rating on Class B1-F Slides to D After Loss-----------------------------------------------------------------Standard & Poor's Ratings Services lowered its rating on class B1-F of Cityscape Home Equity Loan Trust 1997-C to 'D' from 'CCC'. Concurrently, ratings are affirmed on all other classes from this series and all other Cityscape Home Equity Loan Trust transactions rated by Standard & Poor's.

The lowered rating reflects that the fact that the class suffered a principal loss of $96,488.80 during the distribution period ending Nov. 26, 2004. An additional loss was applied to the class for the period ending Dec. 27, 2004. Based on the current performance, it is not likely that the principal losses will be recoverable. In addition, future interest payments will be determined on the new, lower balance.

The affirmations reflect adequate credit support percentages, which are provided by subordination, overcollateralization, and excess interest. In addition, the affirmed 'AAA' ratings on various classes from series 1996-2, series 1996-3,and series 1996-4 are insured by policies issued by MBIA Insurance Corp., Financial Security Assurance Inc., or Financial Guaranty Insurance Co., thus reflecting the financial strength of the underlying insurance providers.

As of the December 2004 distribution date, total delinquencies for the two nonbond-insured transactions ranged from 36.02% (series 1997-C group 1) to 44.34% (series 1997-B group 2). Serious delinquencies ranged from 27.75% (series 1997-C group 1) to 44.34% (series 1997-B group 2), and cumulative losses ranged from 4.28% (series 1997-C group 2) to 9.48% (series 1997-C group 1).

As of the December 2004 distribution date, total delinquencies for the bond-insured transactions ranged from 32.78% (series 1996-4) to 37.65% (series 1996-2). Serious delinquencies ranged from 21.47% (series 1996-3) to 26.65% (series 1996-2), and cumulative losses ranged from 9.68% (series 1996-4) to 11.51% (series 1996-2).

All of the transactions are backed by fixed- or adjustable-rate subprime home equity mortgage loans secured by first and second liens on owner-occupied one- to four-family residences.

CLEARLY CANADIAN: Raises Cdn$258,750 in Private Equity Placement----------------------------------------------------------------Clearly Canadian Beverage Corporation (OTCBB:CCBC) (TSX:CLV) completed a private placement of 1,035,000 shares at a price of Cdn$0.25 per share, generating gross proceeds of Cdn$258,750. The private placement was originally announced by news release dated December 9, 2004, and at that time the Company indicated a placement of up to 1,500,000 shares, of which 1,035,000 shares were issued. Directors, offices and employees of the Company subscribed for all of the 1,035,000 shares, which was the maximum number of shares that such non-arms-length parties were permitted to acquire under applicable Toronto Stock Exchange rules and policies. The proceeds from the private placement will be used to fund the Company's current inventory production requirements.

In connection with the private placement, directors and/or officers of the Company acquired shares as follows:

-- Douglas L. Mason, President and C.E.O. acquired 700,000 shares;

-- Bruce E. Morley, C.L.O. acquired 115,000 shares;

-- Stuart R. Ross, C.F.O. acquired 25,000 shares;

-- Philip J. Langridge, director, acquired 100,000 shares;

-- Neville W. Kirchmann, director, acquired 50,000 shares; and

-- Glen D. Foreman, director, acquired 25,000 shares.

Due to the relationship between the directors and officers and the Company, the private placement is considered to be a "related party transaction" as defined under Ontario Securities Commission Rule 61-501, however, it is exempt from certain applications of the Rule on the basis that the common shares of the Company issued to the directors and officers represents less than 25% of the current market capitalization of the Company. On a diluted basis, directors and officers of the Company have collectively increased their ownership in the Company by 8.36%. The private placement shares are subject to a required four-month hold period and no discounts or warrants were offered or issued in connection with the private placement.

About Clearly Canadian

Based in Vancouver, B.C., Clearly Canadian -- http://www.clearly.ca/-- markets premium alternative beverages, including Clearly Canadian(R) sparkling flavoured water, Clearly Canadian O+2(R) oxygen enhanced water beverage and Tre Limone(R) which are distributed in the United States, Canada and various other countries.

At September 30, 2004, Clearly Canadian's balance sheet showed a $681,000 stockholders' deficit, compared to $1,125,000 in positive equity at December 31, 2003.

CONCENTRA OPERATING: 100% of $155MM Sr. Notes Tendered in Exchange------------------------------------------------------------------Concentra Operating Corporation reported the final results of its offer to exchange $155,000,000 aggregate principal amount of its outstanding 9-1/8% Senior Subordinated Notes due 2012 for $155,000,000 aggregate principal amount of its 9-1/8% Senior Subordinated Notes due 2012, which have been registered under the Securities Act of 1933.

The Exchange Offer expired Jan. 6, 2004, at 5:00 p.m., New York City time. Based on the final count by the exchange agent, 100% of the $155,000,000 aggregate principal amount of the outstanding Old Notes was tendered for exchange.

About the Company

Concentra Operating Corporation, a wholly owned subsidiary of Concentra Inc., is the comprehensive outsource solution for containing healthcare and disability costs. Serving the occupational, auto and group healthcare markets, Concentra provides employers, insurers and payors with a series of integrated services which include employment-related injury and occupational health care, in-network and out-of-network medical claims review and repricing, access to specialized preferred provider organizations, first notice of loss services, case management and other cost containment services. Concentra provides its services to over 135,000 employer locations and more than 3,700 insurance companies, health plans and third party administrators nationwide.

CONSOLIDATED COMMS: Moody's Puts B1 Rating on $390M Sr. Sec. Loan-----------------------------------------------------------------Moody's Investors Service has assigned a B1 rating to Consolidated Communications Acquisition Texas, Inc.'s -- CCAT -- and Consolidated Communications Inc.'s -- CCI -- $390 million senior secured term loan. At the same time, Moody's is affirming the B1 rating on CCAT's and CCI's existing senior secured term loans and revolving credit facility as well as Consolidated Communications Texas Holdings, Inc.'s -- CCTH -- B1 senior implied rating and SGL--2 liquidity rating and the B3 rating on CCTH's and Consolidated Communications Illinois Holdings, Inc.'s -- CCIH -- senior unsecured notes. Moody's intends to withdraw the ratings on CCAT's and CCI's existing term loans once their $390 million credit facility and initial public offering are consummated. At that time, CCTH and Homebase Acquisition LLC will merge into CCIH and be renamed Consolidated Communications Holdings Inc. -- CCH.

Moody's has assigned these rating:

-- CCAT and CCI

* $390 million Senior Secured Term Loan due 2011 -- B1

Moody's has affirmed these ratings:

-- CCAT and CCI

* $30 Million Revolving Senior Secured Credit Facility due 2010 -- B1

* $122 Million Senior Secured Term Loan A due 2011 -- B1

* $314 Million Senior Secured Term Loan C due 2011 -- B1

-- CCTH

* Senior Implied Rating -- B1

* Senior Unsecured Issuer rating -- B3

* Liquidity rating -- SGL-2

-- CCTH and CCIH

* $200 Million 9.75% Senior Unsecured Notes due 2014 -- B3

Moody's has changed the outlook on all ratings from negative to stable.

The ratings reflect Consolidated's high leverage (roughly 4x total debt to TTM adjusted EBITDA as of Q3'04 on a pro forma basis), vulnerability to heightened wireless or cable telephony competition in its rural markets, and its relatively flat top-line growth prospects and limited post-dividend free cash flow. Stable and dependable operating cash flow, a favorable regulatory environment, barriers to competitive entry, and a shift in the company's capital structure, subsequent to the planned IPO, to one with a higher equity weighting, support the ratings.

The change in outlook from negative to stable outlook reflects the company's success in navigating the challenges inherent to its April 2004 acquisition of TXU Communications, which increased the company's access lines by roughly 190%. Consolidated has reduced headcount at its Texas operations by 70 employees and is within cost targets for implementation of its integration strategy.

If Consolidated were to meet or exceed our expectations with respect to free cash flow generation, and it begins to deleverage materially, the outlook and ratings could improve over time. However, the common dividend payment, subsequent to the IPO, will consume much of the free cash flow available for debt reduction. Consequently, Moody's does not anticipate significant debt reduction going forward unless margins improve to at least 45% so long as anticipated dividends, concurrently, remain unchanged. If EBITDA margins were to fall below 40% for a protracted period, the company's ratings would likely decline.

In early December 2004, the company announced an IPO of up to $400 million of its common equity ($81.5 million in net proceeds from the offering after deducting offering-related expenses). Concurrent with the IPO, the company expects to amend and restate its credit facilities by increasing the amount of term loans from $314 million to $390 million. Proceeds from the $390 million term loan and a portion of the proceeds from the IPO will be used to pay down the existing $119 million Term A loan, refinance the Term C loan and $70 million of the 9.75% senior unsecured notes (leaving $130 million of senior notes outstanding).

Upon completion of the IPO, the company's organizational structure will have been simplified. Subsequent to the IPO, Homebase Acquisition, CCTH and CCIH will have consolidated into one entity, CCH. CCH will succeed and assume the obligations of CCTH and CCIH under the indenture. Homebase, the parent prior to the contemplated transaction, guarantees the several obligations of CCTH, CCIH, CCAT and CCI on a limited basis. The company expects that the bank lenders will release CCH, as successor to Homebase Acquisition, from the downstream limited recourse guarantee.

Moody's expects that CCH and each of the borrowers' (i.e. CCAT and CCI) subsidiaries, with the exception of Illinois Consolidated Telephone Co. -- ICTC, will jointly and severally, fully and unconditionally guarantee the bank credit facilities. Moody's notes that Illinois Consolidated Telephone Co. comprises over 20% of the company's consolidated revenue, EBITDA, and nearly 30% of its net plant. The credit facilities are secured by a perfected lien and pledge of all capital stock and inter-company notes of CCH (and each of its direct and indirect subs, including a pledge of stock of ICTC) and a perfected lien and security interest in all assets. These facilities are not notched relative to the senior implied rating since they comprises the preponderance of the company's debt. The 9.75% senior unsecured notes are rated two notches below the B1 senior implied rating since these notes lack security and do not benefit from upstream guarantees, and are effectively subordinated to all of the company's subsidiaries' payables.

Consolidated's SGL-2 rating reflects Moody's view that the company possesses good liquidity and has an ability to meet its estimated obligations over the next twelve months through internal resources. Subsequent to the IPO, and accounting for an anticipated $48 million annual common dividend payment, Moody's expects the company to generate roughly $10-15 million annually in free cash flow. Moody's understands that the amended credit agreement will contain provisions that restrict the company's ability to pay dividends should EBITDA generation falter, and will mandate compliance with a total net leverage test -- TBD. As of 9/30/04, the company could have paid out upwards of $63 million under the amended and restated credit agreement. Consolidated's total net leverage (as defined in the credit agreement) was 3.9x for the TTM ending 9/30/04 pro forma for the transaction.

Moody's believes that stable and predictable cash flows, which characterize most rural telephone properties, result in a relatively low risk business model. Historically, Consolidated's properties have experienced little competition due to market demographics and a favorable regulatory regime in Texas. Low customer density (as low as 66 people per square mile in five counties in Illinois served by Consolidated) and the high residential component (roughly 66% of the company's access lines) to the company's operations provide an effective barrier to entry as it is not economically feasible for a competitor to build out a new network in their Texas and Illinois service territories. Consolidated's RLEC status also exempts it from interconnection requirements that would otherwise allow competitors to use the company's access lines.

Moody's expects only nominal revenue growth and EBITDA margin improvement, primarily at the Texas operations, over the next several years. Free cash flow generation will depend largely on careful operating expense and capital investment management, little net revenue impact from any changes to Federal and Texas USF subsidies, and effective hedging of floating rate interest rate exposure. Federal and state subsidies currently exceed 15% of total revenues -- with higher reliance on subsidies being a credit negative from Moody's perspective. Subsequent to the amendment and restatement of the credit facility and the anticipated purchase of $70 million of the 9.75% senior notes, roughly 75% of the company's debt will be floating rate. Moody's assumes that at least half the floating rate debt (i.e. the senior secured bank debt) will be hedged to a fixed rate as is currently the case.

The company has employed a disciplined investment strategy in maintaining and steadily upgrading its network. Moody's expects the company to continue spending at roughly the industry norm of 10-13% of revenues on capital investment. In addition, Moody's expects the company to remain in compliance with its bank covenants, affording it full access to the $30 million undrawn revolver. Subsequent to the amendment and restatement of the credit facility, Consolidated's assets will remain largely encumbered and therefore provide little if any additional alternative funding flexibility. Moody's assessment of present trading levels for RLEC assets indicates that debt holders benefit from adequate asset protection metrics, particularly holders of the senior secured bank debt.

Consolidated Communications is a rural local exchange carrier headquartered in Mattoon, Illinois.

CONSTELLATION BRANDS: Third Quarter Net Sales Top $1 Billion------------------------------------------------------------Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading international producer and marketer of beverage alcohol brands, reports an increase in record net sales for its third quarter ended Nov. 30, 2004, topping $1 billion for the second consecutive quarter. Net sales increased 10 percent, driven by growth across the company's branded wine, U.K. wholesale and spirits businesses. Currency contributed four percent of the increase.

"Constellation's beverage alcohol business growth continues to be dynamic, with growth coming from existing brands in our wine and spirits portfolios, as well as from new product introductions, line extensions and marketing initiatives," stated Richard Sands, Constellation Brands chairman and chief executive officer. "We're also experiencing healthy growth from the Australian and New Zealand wines, as well as from our wholesale business in the United Kingdom. We're confident in the sustainability of our business growth trend, as well as our ability to create incremental value for our shareholders, customers and retailers."

Net sales for the quarter grew 14 percent, to $773.8 million, driven by growth in branded wine net sales and the U.K. wholesale business, as well as a six percent favorable impact from currency.

"To ensure we continue to deliver profitable growth, we are vigilant in our quest for new opportunities that enhance and expand the breadth of our portfolio of offerings and operational scale," explained Mr. Sands. The acquisition of The Robert Mondavi Corporation strengthens Constellation's position as the largest wine producer and marketer in the world, and makes it the top premium wine company in the U.S., as well as the largest wine company in the U.S. based on dollar sales.

As reported in the Troubled Company Reporter on Dec. 9, 2004, Moody's Investors Service assigned a Ba2 rating to Constellation Brands, Inc.'s proposed $2.9 billion senior secured credit facility from which the proceeds will be used to finance the approximately $1.4 billion purchase of The Robert Mondavi Corporation (no debt rated by Moody's) announced in November 2004. The secured debt rating is one notch lower than the Ba1 rating for Constellation's existing $1.2 billion facility due to the substantial amount of incremental debt and the reduction in excess collateral coverage in a distress scenario. Concurrent with the rating assignment (and prospective withdrawal of the existing secured debt rating), Moody's confirmed Constellation's existing ratings and assigned a stable ratings outlook. These rating actions conclude the review for possible downgrade initiated on November 9, 2004. Constellation's Speculative Grade Liquidity rating of SGL-1, denoting very good liquidity, is unaffected by the rating actions and will be revisited after the completion of the proposed acquisition and financings.

CSFB MORTGAGE: Moody's Junks Four Mortgage Securitization Classes-----------------------------------------------------------------Moody's Investors Service has upgraded 29 classes of mezzanine and subordinated tranches from 7 fixed rate mortgage securitizations issued by Credit Suisse First Boston Mortgage Securities Corp. in 2002. In addition, Moody's has confirmed the ratings on 12 classes of mezzanine and subordinated tranches from 4 mortgage securitizations issued by Credit Suisse First Boston Mortgage Securities Corp. in 2002. Moody's has also downgraded 11 classes of mezzanine and subordinated tranches from 5 fixed rate mortgage securitizations issued by Credit Suisse First Boston Mortgage Securities Corp. in 2002. According to Michael Labuskes, Associate Analyst, "The actions are based on the fact that the bonds' current credit enhancement levels, including excess spread where applicable, are either high or low compared to the current projected loss numbers for the current rating level."

According to Mr. Labuskes, "In general, the securitizations being upgraded have benefited from rapid prepayments resulting in the deleveraging of the transactions. In addition, many of these mortgage pools underlying most of these securitizations have performed better than our original expectations."

The securitizations being downgraded suffer primarily from the performance of the underlying loans with cumulative losses exceeding our original expectations. Existing credit enhancement levels may be low given the current projected losses on the underlying pools.

The complete rating actions are:

Issuer: Credit Suisse First Boston Mortgage Securities Corp.

Upgrade:

* Series 2002-9; Group 2; Class II-M-1, upgraded to Aa1 from Aa2

* Series 2002-19; Group 1; Class C-B-1, upgraded to Aaa from Aa3

* Series 2002-19; Group 1; Class C-B-2, upgraded to Aaa from A3

* Series 2002-19; Group 1; Class C-B-3, upgraded to A2 from Baa3

* Series 2002-19; Group 1; Class C-B-4, upgraded to Baa3 from Ba3

* Series 2002-5; Group 1; Class C-B-1, upgraded to Aaa from Aa3

* Series 2002-5; Group 1; Class C-B-2, upgraded to Aaa from A3

* Series 2002-5; Group 1; Class C-B-3, upgraded to A2 from Baa2

* Series 2002-5; Group 1; Class C-B-4, upgraded to Baa3 from Ba3

* Series 2002-7; Class M-1, upgraded to Aaa from Aa2

* Series 2002-7; Class M-2, upgraded to Aaa from A2

* Series 2002-7; Class B, upgraded to A2 from Baa2

* Series 2002-24; Group 1; Class I-B-1, upgraded to Aaa from Aa1

* Series 2002-24; Group 2; Class C-B-1, upgraded to Aaa from Aa2

* Series 2002-24; Group 2; Class C-B-2, upgraded to Aa2 from A2

* Series 2002-24; Group 2; Class C-B-3, upgraded to A2 from Baa2

* Series 2002-26; Group 1; Class I-B-2, upgraded to Aaa from Aa2

* Series 2002-26; Group 1; Class I-B-4, upgraded to Baa2 from Baa3

* Series 2002-26; Group 2; Class II-B-1, upgraded to Aaa from Aa1

* Series 2002-26; Group 4; Class IV-B-1, upgraded to Aaa from Aa3

* Series 2002-26; Group 4; Class IV-B-2, upgraded to Aaa from A2

* Series 2002-26; Group 4; Class IV-B-3, upgraded to A2 from Baa3

* Series 2002-26; Group 4; Class IV-B-4, upgraded to Baa2 from Ba3

* Series 2002-34; Group 1; Class D-B-1, upgraded to Aaa from Aa3

* Series 2002-34; Group 1; Class D-B-2, upgraded to Aa3 from A3

* Series 2002-34; Group 1; Class D-B-3, upgraded to Baa1 from Baa3

* Series 2002-34; Group 3; Class C-B-1, upgraded to Aaa from Aa3

* Series 2002-34; Group 3; Class C-B-2, upgraded to Aa2 from A3

* Series 2002-34; Group 3; Class C-B-3, upgraded to Baa1 from Baa3

Confirm:

* Series 2002-10; Group 1; Class I-B, confirmed at Baa2 * Series 2002-10; Group 2; Class II-B-3, confirmed at Baa3 * Series 2002-5; Group 4; Class IV-B-5 confirmed at Ba3 * Series 2002-26; Group 1; Class I-B-3, confirmed at A2 * Series 2002-26; Group 2; Class II-B-2, confirmed at Aa3 * Series 2002-26; Group 2; Class II-B-3, confirmed at A3 * Series 2002-29; Group 1; Class I-B-1, confirmed at Aa2 * Series 2002-29; Group 1; Class I-B-2, confirmed at A3 * Series 2002-29; Group 1; Class I-B-3, confirmed at Baa2 * Series 2002-29; Group 1; Class I-B-4, confirmed at Ba2 * Series 2002-29; Group 2; Class II-B-4, confirmed at Ba3 * Series 2002-30; Group 1; Class D-B-1, confirmed at Aa3

Rodney O'Neal is named president and chief operating officer, with responsibility for Delphi's three operating segments, its three regional operations, Global Supply Management and Sales and Marketing. Mr. O'Neal, 51, previously was president of the Dynamics, Propulsion, Thermal & Interior business sector of the company and the customer champion for the Ford Motor Company account. Mr. O'Neal also was named to the Delphi Board of Directors.

The appointment marks the first time that a single officer other than founding chairman, CEO and President J. T. Battenberg III will be responsible for all of Delphi's global business units. Mr. O'Neal will continue to report to Mr. Battenberg, who remains chairman and CEO and also chair of the Delphi Strategy Board, the company's top policy-making group.

David B. Wohleen is named to a new vice chairman position, with responsibility for several of Delphi's major growth engines, including commercial vehicles, Delphi Medical Systems Corp., and Delphi's research and development group. Mr. Wohleen, 54, also retains responsibility for the company's largest commercial account, General Motors. He previously had been president of the Electrical, Electronics & Safety business sector of the company, including its Product & Service Solutions business unit, which transitions to O'Neal. Mr. Wohleen will continue to report to Battenberg.

Donald L. Runkle, 59, who had been vice chairman, enterprise technologies, will consult with the management team on a transitional basis until his retirement later this year. He also had been the customer champion for commercial vehicles and DaimlerChrysler accounts, and a member of the Delphi Board of Directors.

Mr. Battenberg praised Mr. Runkle for his long and distinguished career with Delphi and General Motors. "Don has been an important member of our leadership team, and one of the architects of our lean enterprise and cost reduction efforts. His technical acumen and his understanding of lean concepts have been important contributions to our success in both areas. I'm grateful for the part of his career that he spent with Delphi."

Mark Weber, executive vice president, and Logan Robinson, vice president and general counsel, will continue to report to Mr. Battenberg, with their responsibilities unchanged.

Mr. Battenberg said the appointments will bring sharper focus to the company's growth, lean, and cost reduction efforts. "Rod will have responsibility for the operating performance of the company's core business and our focus on becoming a truly global and lean enterprise," Mr. Battenberg said. "Dave's focus will be on specific areas where we are moving our technical capability into adjacent markets such as commercial vehicles and medical, and he will also oversee our advanced research and development for both automotive and other applications."

Mr. Battenberg said that while all of the operating units will report to Mr. O'Neal, the company will continue to report financials for three segments: Automotive Holdings; Dynamics, Propulsion, Thermal & Interior; and Electrical, Electronics & Safety. All other officer assignments and reporting relationships remain the same.

As reported in the Troubled Company Reporter on Dec. 23, 2004, Standard & Poor's Ratings Services lowered its corporate credit rating on Delphi Corp. to 'BB+' from 'BBB-' and its short-term corporate credit rating to 'B' from 'A-3'. The ratings were removed from CreditWatch where they were placed Dec. 2, 2004. The outlook is stable.

"The action reflected our view that Delphi's earnings outlook will remain weak for the next few years because of challenging conditions in the automotive industry, a heavy dependence on General Motors Corp. (BBB-/Stable/A-3), which is losing market share in the U.S., and continued heavy underfunded employee benefit obligations," said Standard & Poor's credit analyst Martin King.

DUO DAIRY: Trustee Taps Connolly Rosania as Counsel---------------------------------------------------Dennis W. King, the chapter 7 Trustee of Duo Dairy, Ltd., LLLP, asks the U.S. Bankruptcy Court for the District of Colorado for permission to employ Connolly, Rosania & Lofstedt, PC, as his counsel.

Mr. King requires the professional services of Connolly Rosania to assist him in the investigation and recovery of the estate's assets and in any legal matters related to Duo Dairy's bankruptcy case.

Douglas C. Pearce II, Esq., an associate at Connolly Rosania will be the Trustee's primary attorney. Mr. Pearce will charge the Debtor $165 per hour for his professional services.

To the best of the Trustee's knowledge, Connolly Rosania is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code.

Headquartered in Loveland, Colorado, Duo Dairy, LTD., LLP, filed for chapter 11 protection on March 12, 2004 (Bankr. D. Colo. Case No. 04-14827). The case was converted to chapter 7 on October 27, 2004, and Dennis W. King was appointed as the Chapter 7 Trustee to oversee the company's liquidation. Jeffrey A. Weinman, Esq., and William A. Richey, Esq., at Weinman & Associates, P.C., represent the Debtor. When the Debtor filed for protection from its creditors, it estimated assets of $50 Million and estimated debts of $50 million.

Revenue for the second quarter ended June 30, 2004 was $1,053,000, compared to $1,213,000 for the same period in 2003, a decrease of $160,000, or 13%. Compared to revenue of $833,000 for the first quarter of 2004, total revenue increased by $220,000, or 26%. Revenue for the six-month periods ended June 30, 2004 and 2003 amounted to $1,886,000 and $2,244,000, respectively, a decrease of $358,000, or 16%. The year-over-year decrease for the three and six months period was caused by reduced IT spending by the Company's largest client and the Company's reduction in marketing and selling expenses, as it focused on generating revenue from existing relationships. The sequential increase in revenue was primarily attributable to the timing of completed large projects for which revenue is recognized on completion and ramp up of a large customer on the Company's Trade Gateway platform.

Total expenses for the second quarter ended June 30, 2004 were $893,000. Excluding a $566,000 one-time adjustment in 2003, total expenses for the second quarter 2004 decreased $103,000 or 10% from $996,000 in the same period in 2003. Total expenses for the six-months ended June 30, 2004 were $1,734,000. Excluding a $566,000 one-time adjustment in 2003, total expenses for the six months ended June 30, 2004 decreased $522,000 or 23% from $2,256,000 in the same period in 2003.

Income from continuing operations for the quarter ended June 30, 2004 was $160,000 compared to income from continuing operations of $217,000 for the same period in 2003, excluding the one-time adjustment of $566,000 in 2003. Income from continuing operations for the six months ended June 30, 2004 was $152,000 compared to a loss from continuing operations of $12,000 for the same period in 2003, excluding the one-time adjustment of $566,000 in 2003.

Net income in the second quarter of 2004 was $17,000, or $0.00 per share compared to income of $632,000, a decrease of $615,000. Excluding the $566,000 one-time adjustment in the second quarter of 2003, net income decreased $49,000 in the second quarter of 2004. Net loss for the six months ended June 30, 2004 was $162,000, compared to net income of $217,000, a decrease of $379,000. Excluding the $566,000 one-time adjustment in the six months ended June 30, 2003, net income improved $187,000 in the six months ended June 30, 2004.

Net cash provided by operating activities for the six months ended June 30, 2004 was $125,000 versus cash used in operating activities of $118,000 for the same period in 2003.

At June 30, 2004, the Company had approximately $271,000 of cash, and a negative working capital position of $4,592,000.

On October 27, 2004, the Company filed a Plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York, Bankruptcy Case Number 04-16926(CB) in order to effectuate a settlement with its Senior Secured Noteholders, who had demanded acceleration of their Notes as a result of the Company's default on interest payments. A confirmation hearing has been scheduled in the case for January 26, 2005.

Investors may secure a copy of the Disclosure Statement in the bankruptcy case at the Bankruptcy Court's Internet site at http://www.nysb.uscourts.gov/ Alan Halperin and Bob Raicht of Halperin, Battaglia, and Raicht, LLP are representing the Company.

About eB2B Commerce, Inc.

eB2B Commerce is a leading provider of business-to-business transaction management services that simplify trading partner integration, automation, and data exchange across the order management life cycle. eB2B's Trade Gateway and supplier enablement services provide enterprises large and small with robust and reliable alternatives for establishing trading hubs with their small and mid-size supplier base.

"I'm pleased with our progress in 2004 given all the obstacles we faced," said Doug Foshee, president and chief executive officer of El Paso. "Our pipelines continued to deliver solid results, and we continued to capture a significant share of the expansion opportunities in our markets. In exploration and production, after a period of evaluation, we are now increasing our activity levels in key basins. Production volumes have stabilized, and we expect to be able to show growth from current levels in 2005 and beyond, both through the drillbit and through acquisitions. The other remaining businesses continue to deliver on their commitments. We also made great strides in improving our financial health in 2004. We reduced net debt by $3.4 billion during the year and expect to continue to reduce debt this year. And importantly, we renewed our $3-billion credit facility for a longer term, at lower rates, and with fewer banks--further evidence of our improving condition.

"While we are pleased with this progress, we are not satisfied, and we look forward to showing continued progress throughout 2005. I want to thank our thousands of employees around the world for their tireless efforts in 2004 on behalf of Team El Paso and assure our shareholders of our continued focus on stewardship of their investment in 2005."

For the nine months ended September 30, 2004, El Paso had cash flow from operating activities totaling $799 million, which was impacted by a $604- million payment for its western energy settlement. The $1.4 billion of cash flow prior to this payment was equal to the company's spending for capital expenditures and dividends during the nine-month period.

As of December 31, 2004, El Paso had $2.4 billion of liquidity, comprised of $1.8 billion of available cash and $560 million of borrowing capacity under its credit facilities. The company defines available cash as cash on deposit or held in short-term investments that is easily accessible for general corporate purposes.

El Paso Corporation -- http://www.elpaso.com/-- provides natural gas and related energy products in a safe, efficient, dependable manner. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers.

* * *

As reported in the Troubled Company Reporter on Nov. 17, 2004, Moody's Investors Service confirmed El Paso Production Holding's senior unsecured note and senior implied B3 ratings and moved the rating outlook to stable. Given El Paso Production's weak production trend and natural gas price volatility, the outlook and the ratings will be closely monitored. El Paso Corporation wholly owns El Paso Production.

ENRON: EESI Gets Court Nod on Four Settlement Agreements--------------------------------------------------------Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, Enron Energy Services, Inc., sought and obtained the Court's permission to enter into settlement agreements with each of these counterparties:

Edward A. Smith, Esq., at Cadwalader Wickersham & Taft, in New York, relates that prior to the Petition Date, EESI and the Counterparties entered into various contracts for the sale of energy. Discussions between EESI and the Counterparties resulted in EESI's agreeing to enter into a Settlement Agreement with each of the Counterparties. Among others, the Settlement Agreements provide a mutual release of claims related to the Contracts.

Pursuant to the Settlement Agreements, EESI and the Counterparties also agree that:

(b) each Scheduled Liability related to the Counterparties, or claims filed by or on behalf of the Counterparties against EESI in connection with the Contracts, will be deemed irrevocably withdrawn with prejudice and, to the extent applicable, expunged and disallowed in their entirety.

The Settlement Agreements will clearly benefit EESI and its creditors. Mr. Smith asserts that the Settlement Payments adequately compensate the estate for the value of the Contracts. Moreover, the Settlement Agreements will avoid future disputes and litigation concerning the Contracts.

The Debtors believe that the Settlement Agreements will allow EESI to capture the value of the Contracts for its estate, while avoiding the costs associated with possible future litigation.

Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply.

FALCON NEST: Judge Riegke Formally Dismisses Bankruptcy Case------------------------------------------------------------ The Honorable Linda B. Riegke of the U.S. Bankruptcy Court for the District of Nevada formally dismissed the bankruptcy case filed by Falcon Nest, LLC, on December 27, 2004.

The Debtor filed a motion to dismiss its chapter 11 case on October 21, 2004.

The Debtor tells the Court that it filed a chapter 11 petition with the Court in order to stop a pending foreclosure on its only asset, a real property located in Mesquite, Nevada.

The Debtor relates that on August 13, 2004, one of its secured creditors, Vestin Mortgage, Inc., with a claim in excess of $7,700,000 filed a motion to the Court for relief from the automatic stay as to conclude foreclosure on the Debtor's real property located in Mesquite, Nevada.

The Court granted Vestin Mortgage's motion on September 28, 2004, and the Court's order became effective on October 1, 2004. Vestin Mortgage eventually foreclosed on the Debtor's real property in Mesquite, Nevada.

Judge Riege based her decision on the two facts cited by Falcon Nest on its motion for dismissal:

a) since Vestin Mortgage has foreclosed on the Debtor's only asset, it has no more assets and its bankruptcy proceeding is no longer necessary; and

b) the Debtor cannot obtain funding to fund a rehabilitation or reorganization, resulting in the absence of a reasonable likelihood of rehabilitation.

The Court concludes that these facts demonstrate causes to dismiss the Debtor's bankruptcy case as required under Section 1112(b) of the Bankruptcy Code.

Headquartered in Las Vegas, Nevada, Falcon Nest, LLC, filed forchapter 11 protection on August 9, 2004 (Bankr. Nev. Case No.04-18579). The Court dismissed the case on December 27, 2004. Alan R. Smith, Esq., at Law Offices of Alan R. Smith represented the Debtor. When the Debtor filed for chapter 11 protection, it estimated $10 million to $50 million in assets and $1 million to $10 million of liabilities.

FEDERAL-MOGUL: Judge Lyons Approves Inter-Court Communication Plan------------------------------------------------------------------More than 300,000 asbestos claims have been filed against Federal-Mogul's U.K. Debtor-affiliates. Approximately 95% of the claimants are U.S.-based and assert claims arising from injury sustained in the United States as a result of business conducted by the U.K. Debtors in the U.S.

The Plan Proponents:

-- the Debtors,

-- the Unsecured Creditors Committee,

-- the Asbestos Claimants Committee,

-- the Equity Security Holders Committee,

-- the Legal Representative for Future Asbestos-Related Claimants, and

believe that an estimation proceeding is a critical step for determining:

-- the relative share of the value of the U.K. Debtors as between holders of Asbestos Claims and holders of other claims; and

-- the relative share of that value among the holders of Asbestos Claims, as between U.K. and U.S. holders, for both the Chapter 11 and the Administration Cases.

According to James E. O'Neill, Esq., at Pachulski, Stang, Ziehl,Young, Jones & Weintraub, P.C., in Wilmington, Delaware, the validity and quantification of asbestos claims of the U.S andU.K. claimants are likely to be determined in accordance with the principles of law of the corresponding countries. Thus, the PlanProponents assess that the most appropriate and economical allocation of tasks is for:

-- the U.S. Court to estimate the amount of Asbestos Claims of U.S. claimants, and for the English Court to estimate the amount of Asbestos Claims of U.K. claimants; and

-- each Court to accept the determination of the other with respect thereto.

"It would make little sense to adopt a parochial U.S. or U.K. centric approach and for both courts to determine the asbestos holders' entitlement against the value of the U.K. Debtors because of the location of the different claimants and the laws to be applied," Mr. O'Neill remarks. "An approach suggesting that the U.S. Court should estimate all Asbestos Claims 'for purposes of the Plan' and that the English Court and the Administrator should determine, assess or estimate all Asbestos Claims for purposes of a U.K. scheme of arrangement or Company Voluntary Arrangement is also not sensible. Absent coordination of the courts, the risk of inconsistent determinations relating to the same asbestos claims is great, and the cost to the parties in having to resolve this issue in two forums is not economical."

Therefore, pursuant to the Inter-Court Communication Procedures, the Plan Proponents ask the Bankruptcy Court and the English Court to authorize:

(a) a communication with the English Court to discuss the estimation process of the asbestos personal injury claims; and

(b) the purposes for which the determination should be used through an in-person or telephonic conference.

Objections

(1) U.K. Administrators

Christopher S. Sontchi, Esq., at Ashby & Geddes, in Wilmington,Delaware, tells the Court that the Joint Administrators of theU.K. Debtors are in favor of inter-court communications as a means of avoiding conflicts between the two jurisdictions. However, contrary to the Plan Proponents' contentions, there is nothing to be achieved by communication between the U.S. Bankruptcy Court and the U.K. Court regarding any estimation of Asbestos Personal Injury Claims in connection with confirmation of the Plan.

Mr. Sontchi points out that:

(a) the estimation process would not correspond to any process that is necessary or even likely to take place in the U.K. proceedings after any confirmation of the Plan;

(b) the U.K. Court made clear in the judgment of Justice David Richards on October 21, 2004, that Schemes or Collective Bargaining Agreements are the only mechanisms by which the Plan could be enforced in the U.K. against the creditors of the U.K. Debtors, given that the U.K. Debtors are incorporated and have their principal places of business in the U.K., and all of their material assets are situated in or controlled from the U.K.;

(c) the Administrators will not, absent agreement of all relevant parties-in-interest, propose Schemes or CVAs to implement the Plan as currently drafted, but will instead pursue a controlled realization of the U.K. Debtors' assets;

(d) the distribution process under U.K. law, whether pursuant to a Scheme or CVA or some other distribution process following a controlled realization, does not involve any estimation of claims by the U.K. Court but is based on the submission of claims by individual claimants and admission of those claims in the U.K. process, and the adoption by the relevant office holders of an appropriate reserving strategy;

(e) any ruling by the Bankruptcy Court regarding the estimation of asbestos liabilities would not be binding on the Administrators or the U.K. Court as a matter of U.K. law; and

(f) the Plan Proponents have known for a very long time that the Administrators were not prepared to promote Schemes or CVAs designed to implement the Plan in the U.K., and the reasons for the Administrators' decision.

Thus, the Administrators ask the Bankruptcy Court to deny the proposed communication in its entirety.

Because the reasons why a substantive communication is unnecessary and inappropriate as of this time are largely matters of U.K. law, the Administrators recognize that a preliminary communication pursuant to Paragraph A.7.ii.b.2 of the Procedures and Issues for Inter-Court Communications may be helpful to both Courts to inform the other of the nature of the processes being or to be undertaken in the two jurisdictions.

(2) PD Committee

According to Theodore J. Tacconelli, Esq., at Ferry, Joseph &Pearce, P.A., in Wilmington, Delaware, the Property DamageCommittee has no objection to inter-court communications on the topic of estimation of asbestos bodily injury claims. "It does not appear likely, however, that the proposed inter-court communications will result in any measure of clarity . . . with respect to the scope of the estimation hearing, or that the PlanProponents' proposed allocation of responsibilities for bodily injury claims estimation between the U.S. and the U.K. courts is feasible under the current circumstances."

Mr. Tacconelli notes that the Plan Proponents now concede that the proposed Third Amended Plan of Reorganization will have to be amended yet again based on the results of any estimation hearing.But by suggesting a bifurcation of responsibility for estimation between the two courts, Mr. Tacconelli says, the Plan Proponents all but ensure that any ruling by the Court on estimation will be incomplete, leaving the Plan in limbo once again. "And because there is no procedure under UK law for estimation of claims in the absence of a proposed scheme of arrangement or company voluntary arrangement, the proposal that the U.K. court conduct that estimation now, or even in the near future, appears infeasible. This is particularly true in [Federal-Mogul's] case where the U.K. Administrators have sought and received authority from the U.K. court to oppose the Plan and have indicated that they cannot support a Scheme or CVA to implement the Plan in the U.K."

"While little is clear in this matter, what is clear is that the protocol for estimation put forth by the Plan Proponents is not tenable," Mr. Tacconelli asserts.

* * *

Pursuant to Section 7.S.ii.b.i.1 of the Inter-Court CommunicationProcedures and subject to the agreement of the English Court,Judge Lyons rules that a communication with the English Court will take place, regarding the estimation process of the aggregate amount of all Asbestos Claims against the U.K. Debtors and the purposes for which that determination should be used.

The Court overrules the objections of the Administrators and thePD Committee.

If the English Court approves a communication pursuant to theInter-Court Communications Procedures, Judge Lyons rules, that communication is in good faith and is required to take place urgently and should be heard on 36 hours' notice thereafter.

Judge Lyons authorizes and directs the Clerk of Court of the U.S.Court to coordinate with the Clerk of the English Court, the PlanProponents, the Administrators and any other necessary parties to establish the time, place and manner of the communication, including scheduling a conference call.

FINOVA GROUP: Counsel Presents Final Report on Chapter 11 Cases---------------------------------------------------------------Richard Lieberman, Senior Vice President, General Counsel and Secretary of The FINOVA Group, Inc., presents to the Court a final report in the Chapter 11 cases of:

No Chapter 11 trustee or examiner was appointed in the Cases. Hence, no fees were incurred for a trustee or trustee's counsel.

All payments to professionals in the Debtors' cases were made by FINOVA Capital Corporation. The fees and expenses awarded to retained professionals, members of the Official Committee of Unsecured Creditors, and members of Official Committee of Equity Security Holders will be provided on a consolidated basis at the closing of FINOVA Capital Corp.'s bankruptcy case.

As reported in the Troubled Company Reporter on Jan. 10, 2005, Judge Walsh entered a final decree closing six Chapter 11 cases:

Judge Walsh keeps the Chapter 11 case of FINOVA MezzanineCapital, Inc., open in view of the pending adversary proceedingcommenced by Teltronics.

The Debtors' right to renew their request to seek closure of theFINOVA Mezzanine Case in the future, notwithstanding the pendencyof the Teltronics Adversary Proceeding, is reserved.

The Closing Cases may be reopened at any time in accordance withand for the purpose established by Section 350(b) of theBankruptcy Code.

Judge Walsh directs the Clerk of the Court to maintain one fileand docket for the Remaining Case of FINOVA Capital Corporation,Case No. 01-698 (PJW). All subsequent pleadings will be filed inthe Remaining Case.

FISHER COMMS: President & CEO William W. Krippaehne Jr. Resigns ---------------------------------------------------------------Fisher Communications, Inc.'s (Nasdaq:FSCI) President and Chief Executive Officer William W. Krippaehne Jr., has resigned. Mr. Krippaehne also resigned as a member of Fisher Communication's Board of Directors. The resignation will become effective on January 6, 2005. Mr. Krippaehne's resignation was requested by the Board of Directors.

Benjamin W. Tucker, Jr., currently President of Fisher Broadcasting Company, a subsidiary of Fisher Communications, will serve as Fisher Communication's acting President and Chief Executive Officer.

Upon announcing his resignation, Mr. Krippaehne stated, "With the corporate restructuring and refinancing work behind us, it is appropriate for the company to seek new leadership with more direct operating experience in the broadcasting business. After 23 years of service to the company, it is time for me to move on and I wish the employees, management and the Board continued success."

Phelps K. Fisher, the Chairman of Fisher Communication's Board of Directors, stated that, "We appreciate the many contributions Bill Krippaehne has made to our company and his dedication over the past 23 years and we wish him well."

Mr. Tucker, 57, has been President of Fisher Broadcasting Company since 2001. Mr. Tucker was Executive Vice President of Broadcasting Operations of Fisher Broadcasting Company during 2001. He also served as Senior Vice President of Fisher Television Regional Group -- Fisher Broadcasting Company from 1999 to 2001 and was Vice President of Retlaw Enterprises, Inc., a broadcasting company, from 1991 to 1999. He served as National Association of Broadcasters' TV Board Chairman in 2000-2001, as Chairman of the CBS Affiliate Advisory Board from 1987 to 1989 and as Chairman of the Network Affiliate Station Alliance from 1994 to 1995.

Mr. Fisher also stated, "We are confident in the leadership ability of Ben Tucker to run the day-to-day operations of Fisher Communications and to work with the Board until a new Chief Executive Officer is selected."

About the Company

Fisher Communications, Inc. is a Seattle-based integrated media company. Its 9 network-affiliated television stations, and a tenth station 50% owned by Fisher Communications, are located in Washington, Oregon, and Idaho, and its 27 radio stations broadcast in Washington and Montana. It also owns and operates Fisher Plaza, a facility located near downtown Seattle.

* * *

As reported in the Troubled Company Reporter on Sept. 10, 2004, Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Fisher Communications, Inc. At the same time, Standard & Poor's assigned a 'B-' rating to the company's proposed $150 million senior unsecured notes due in 2014. Proceeds from the proposed notes offering are expected to be used to refinance the company's existing credit facilities and to unwind a variable forward sale transaction. The outlook is stable.

The Seattle, Washington-based television and radio station owner and operator had approximately $140 million of debt outstanding at June 30, 2004.

GENERAL NUTRITION: Moody's Rates Proposed $150M Sr. Notes at B3---------------------------------------------------------------Moody's Investors Service assigned a rating of B3 to the proposed $150 million senior note issue of General Nutrition Centers, Inc., upgraded the Bank Loan rating to B1 from B2, and affirmed all other ratings. Together with excess cash, proceeds from the new debt will be used to pay down $185 million of the Term Loan. The Bank Loan upgrade recognizes that the collateral package remains the same even after substantial reduction of the bank commitment. Moody's expectation that sales and debt protection measure trends will remain poor over the medium-term, the uncertainty regarding long-term strategy, and the need for continuous product development constrain the ratings. Providing credit support are the belief that the company will obtain the announced bank loan amendment, Moody's opinion that free cash flow will not fall below break-even in spite of continued weak sales, and potential advantages from GNC's position as the leading retailer of vitamin, mineral, & nutritional supplement -- VMS -- products. The rating outlook is stable.

The rating assigned is:

* $150 million senior note (2011) at B3.

The rating raised is:

* $358 million secured Bank Facility commitment to B1 from B2.

Ratings affirmed are:

* $215 million of 8.5% senior subordinated notes (2010) at Caa1,

* Senior implied rating at B2, and the

* Long-term unsecured issuer rating at B3.

Following the transaction, the Bank Facility commitment will fall to $173 million. Moody's does not rate the 12.0% redeemable preferred stock.

Constraining the ratings are the poor sales results over the previous two quarters as low-carbohydrate food products have become more widely available, the challenges in achieving sales initiatives and operating efficiency gains over the next year, and uncertainty regarding the long-term strategy during a period of transition in senior management. The need for continuous innovation given the short life cycle of many new VMS products, the intense competition within the fragmented VMS retailing industry, and the practice of providing financial support to the majority of new domestic franchisee stores (while acknowledging that over the medium-term most new store development will be outside the U.S. and Canada) also adversely impact the ratings. Over the longer term, failure to resolve the rapidly accreting redeemable preferred stock at the holding company level also will become a concern.

However, credit strengths are Moody's expectation that free cash flow will remain modestly positive, the positive contribution to corporate overhead from most company-operated stores, and potential scale advantages in purchasing and marketing as the leading VMS retailer. The revenue diversity from operations across many geographies, several revenue categories, and a large franchisee base and the purchase frequency from the large base of loyalty card customers also reduce the potential risks to the company's business plan.

The stable rating outlook reflects our expectation that free cash flow will not become negative while total revenue and average unit volume recover and GNC will drive incremental traffic with a steady pipeline of new products. Continued declines in retail margin from further deterioration in store performance, permanent usage of the revolving credit facility, or substantial incremental investment in working capital would place downward pressure on the ratings. Financial difficulties at a significant proportion of franchisees also would negatively impact the ratings, given exposure to franchisees derived from $240 million of royalty payments and wholesale revenue, $23 million of direct loans, and approximately 1321 subleased store locations. Over the longer term, ratings could rise as fixed charge coverage comfortably exceeds 2 times, lease adjusted leverage falls toward 5 times, and the system expands both from new store development (particularly in international markets) and existing store performance.

The B1 rating on the bank loan (comprised of a $75 million Revolving Credit Facility and a post-transaction $98 million Term Loan B) considers that this debt is secured by substantially all of the company's tangible and intangible assets. The bank amendment of December 14, 2004, loosened financial covenants in return for repaying at least $185 million of the Term Loan before January 31, 2005. Following the contemplated transaction, the bank loan rating relative to the senior implied rating reflects:

Moody's expects that the revolving credit facility will provide adequate liquidity for seasonal working capital needs and occasional cash flow timing differences, but will not become permanent capital.

The B3 rating on the senior notes considers that this debt is guaranteed by the company's wholly owned domestic operating subsidiaries on a senior basis. As of September 2004, this senior class of debt would be contractually subordinated to the bank loan and approximately $14 million of mortgages, and would rank equally with $80 million of trade accounts payable.

The Caa1 rating on the senior subordinated notes considers that this debt is guaranteed by the company's wholly owned domestic operating subsidiaries, but is contractually subordinated to substantantial amounts of secured and senior debts. In a hypothetical default scenario with the revolving credit facility fully utilized, Moody's believes that recovery for this subordinated class of debt would partially rely on residual enterprise value.

Lease adjusted leverage equaled 6.0 times (based on gross rent without netting out subrental income) and fixed charge coverage was 1.8 times for the twelve months ending September 30, 2004. Comparable store sales declined by 3.2% and 10.7% in the second and third quarters of 2004, respectively, principally due to substantial declines in the diet category as low-carbohydrate products have become widely available at many retailers. Revenue and margins had been pressured for the previous several years because of the lack of exciting new products to drive incremental sales and the abrupt declines of ephedra sales in 2002 and low-carbohydrate sales in 2004. Moody's anticipates that franchisees will open most new stores over the next several years and that a portion of cash flow after interest expense and maintenance capital expenditures will be available for discretionary purposes.

General Nutrition Centers, Inc., with headquarters in Pittsburgh, Pennsylvania, retails vitamin, mineral, and nutritional supplement products domestically and internationally through about 5700 company-operated and franchised stores. Revenue for the twelve months ending September 2004 was about $1.4 billion.

The rating on the proposed senior unsecured notes is one notch below the corporate credit rating, in accordance with Standard & Poor's policy of notching down senior unsecured debt when there is significant senior secured debt that has a priority claim to the company's assets. GNC plans to use proceeds from the proposed notes offering, together with cash on hand, to repay about $185 million of its $285 million term loan. Pro forma for the transaction, the company will have total lease-adjusted debt (including debt-like preferred stock) of about $862 million, and debt leverage (debt to EBITDA) of 5.2x.

"Ratings on GNC, a leading specialty retailer of nutritional supplements, reflect the company's recent weak operating performance, expectations of continued operational challenges, its product liability risk, and high debt leverage," said Standard & Poor's credit analyst Kristi Broderick. GNC's recent weak operating performance is due to softness in the diet category, a drop-off in sales of low-carb products, and poor execution of operations, which has resulted in a loss of market share. The company's merchandise assortment has not been managed well. A healthy first quarter of 2004 was more than offset by a soft second quarter and an even weaker third quarter. This deteriorating trend is revealed in GNC's comparable-store sales figures for its company-owned domestic stores, which increased 6.7% in the first quarter, but fell 3.2% in the second quarter and then 10.7% in the third quarter. While other players in the nutritional supplements industry are feeling the softness in the diet category, they have not experienced the magnitude of GNC's recent weakness in comparable-store sales.

Sales for the third quarter were $2.52 billion, compared with $2.48 billion in the third quarter of fiscal 2003. Comparable store sales for company-operated stores declined 1.0% vs. year-ago. The loss for the quarter was $1.96 per share this year versus a loss of $0.66 per share last year.

The current quarter's results from continuing operations, as shown on Schedule 1, were a loss of $73 million or $1.89 per share and were in line with last year's results of $73 million or $1.89 per share. The current year's results include charges totaling $37 million related to certain items that the Company believes are of a non-operating nature. These items include $35 million related to impairment charges on long-lived assets in its Midwest operations, $1 million for costs related to the previously announced Canadian Food Basics settlement, $4 million related to the reorganization announced on December 9, offset by a $3 million reversal of prior year restructuring charges. Last year's results include $60 million related to asset impairment charges on long-lived assets in its Midwest operations. Excluding these non-operating items, EBITDA for the quarter was $48 million as compared to $42 million for the same period last year.

Sales for the 40 weeks year to date were $8.29 billion versus $8.18 billion in fiscal year 2003. Comparable store sales for company-operated stores declined 0.1%. The net loss per share was $4.74 for 2004, compared with a loss of $2.51 for 2003, which included earnings of $1.60 per share from discontinued operations. Excluding all year to date non-operating items, EBITDA for the 40 weeks of fiscal years 2004 and 2003 was $164 million and $155 million, respectively.

Christian Haub, Chairman of the Board and Chief Executive Officer, said, "Although we remained unprofitable overall, we maintained market share in a difficult sales environment, while achieving our second consecutive year-over-year increase in operating results.

"Our Canadian operations produced another profitable performance with strong results from our fresh food marketing initiatives, and an improving trend in our Food Basics discount operations. We completed the acquisition of 24 previously franchised Canadian Food Basics stores, and look forward to further improving our discount business. Our U.S. operations continued to improve despite intense competition in all markets, as U.S. operating results again contributed to our EBITDA growth in the quarter.

"To accelerate our return to overall profitability, we have initiated significant organizational changes in the U.S., including the management consolidation announced on November 4, and the subsequent reorganization of U.S. administration, support services and operating staff announced on December 9. This will strengthen central management control, substantially reduce costs, and drive the implementation of our Fresh and Discount retail strategies.

"Our near-term outlook remains conservative as we expect no major upturn in consumer confidence and spending in the U.S., and therefore no easing of competitive pressures. We will continue to manage costs, investment and liquidity closely, maintain our successful growth course in Canada, and implement our U.S. retail strategies, as the benefits of our leaner organization and cost structure materialize," Mr. Haub said.

Founded in 1859, A&P, one of the nation's first supermarket chains, is today among North America's largest. The Company operates 650 stores in 10 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug.

Replays of the audio Webcast of the Company's quarterly discussion of earnings broadcast January 7 are available until February 4 by accessing a link on the "Investor Relations" page of its Web site at http://www.aptea.com/

* * *

As reported in the Troubled Company Reporter on Oct. 27, 2004, Standard & Poor's Ratings Services lowered its ratings on the Great Atlantic & Pacific Tea Co. Inc. The corporate credit rating was lowered to 'B-' from 'B'. The outlook is negative.

"The downgrade reflects weak sales, along with continued poor profitability and cash flow protection," said Standard & Poor's credit analyst Mary Lou Burde. "Although the company is expected to have adequate liquidity to fund its operations through the current fiscal year, additional resources and improved profits will likely be needed to fund its longer-term strategies." A&P reported that same-store sales fell 1% in the U.S., a downward trend from the past several quarters. Although profitability in the U.S. rose marginally, this was nearly all offset by a decline in Canada. Excluding one-time items, EBITDA for the quarter was $43 million, versus $38 million in the prior year. The lease-adjusted operating margin of 4.3% is well below the 7.0% average for rated supermarkets.

"The rating reflects poor profitability and high debt leverage, tempered somewhat by important market positions in Canada and the metropolitan New York area," said Ms. Burde. Soft consumer spending and increasing competition from both conventional and nontraditional food retailers are pressuring gross margins. Combined with rising costs, this resulted in significant drops in operating profit over the past two fiscal years.

Green Valley Ranch Resort is a luxury hotel just a few minutes drive from the excitement of the Las Vegas Strip. An adjacent casino offers gaming, dining, spa and entertainment options.

Recently awarded the AAA Four Diamond Award and voted "Best Local Hotel" by the Las Vegas Review Journal, Green Valley Ranch offers a world-class hotel, a European-style spa and a casino with everyone's favorite games.

HAPPY KIDS: Has Until Feb. 25 to File Bankruptcy Schedules---------------------------------------------------------- The Honorable Cornelius Blackshear of the U.S. Bankruptcy Court for the Southern District of New York gave Happy Kids Inc. and its debtor-affiliates more time to file their Schedules Of Assets and Liabilities, Statements of Financial Affairs, Schedules of Current Income and Expenditures, and Schedules of Executory Contracts and Unexpired Leases. The Debtors have until February 25, 2005, to file those documents.

The Debtors tell the Court that there are four debtor-affiliates in their chapter 11 cases and they have a small staff that must continue to operate their businesses while simultaneously compiling and gathering the necessary information for their Schedules and Statements.

Because of this situation, the Debtors relate that they cannot complete the preparation and filing of their Schedules and Statement within 15 days after the Petition Date as required by Bankruptcy Rule 1007(c).

The Debtors assure Judge Blackshear that the extension will give them more time in working diligently to accurately gather and prepare their Schedules and Statements and file it on or before the extension deadline.

Headquartered in New York, New York, Happy Kids Inc. and itsaffiliates are leading designers and marketers of licensed,branded and private label garments in the children's apparelindustry. The Debtors' current portfolio of licenses includesIzod (TM), Calvin Klein (TM) and And1 (TM). The Company and itsdebtor-affiliates filed for chapter 11 protection on January 3,2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at Proskauer Rose LLP represents the Debtors' restructuring. When the Debtor filed for protection, it listed total assets of $54,719,000 and total debts of $82,108,000.

HAPPY KIDS: Can Continue Hiring Ordinary Course Professionals------------------------------------------------------------- The Honorable Cornelius Blackshear of the U.S. Bankruptcy Court for the Southern District of New York gave Happy Kids Inc. and its debtor-affiliates permission to continue to retain, employ and pay professionals they turn to in the ordinary course of their business without bringing formal employment applications to the Court.

In the Debtors' day-to-day operation of their businesses, they regularly call upon different professional firms throughout the U.S. to provide them with various ongoing legal and professional services, including auditing, accounting and tax advisory services.

The Debtors tell the Court that it would be costly, time-consuming and administratively cumbersome on their part to require each Ordinary Course Professional to submit formal employment and compensation applications to the Court.

The Debtors assure the Court that:

a) no Ordinary Course Professional will be paid in excess of $20,000 per month, and no more than $100,000 per month for all the Professionals they will employ;

b) in the event that an Ordinary Course Professional's fess and expenses exceeds $20,000 per month, that Professional will submit a formal approval to the Court for his compensation; and

c) each Ordinary Course Professional will submit to the Court, the U.S. Trustee, and the counsel for the Debtors an affidavit describing the Professional's nature of services and their billing procedures and practices.

Although some of Ordinary Course Professionals may hold minor amount of unsecured claims, the Debtors believe that none of them have an interest materially adverse to the Debtors, their creditors or other parties in interest.

Headquartered in New York, New York, Happy Kids Inc. and itsaffiliates are leading designers and marketers of licensed,branded and private label garments in the children's apparelindustry. The Debtors' current portfolio of licenses includesIzod (TM), Calvin Klein (TM) and And1 (TM). The Company and itsdebtor-affiliates filed for chapter 11 protection on January 3,2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at Proskauer Rose LLP represents the Debtors' restructuring. When the Debtor filed for protection, it listed total assets of $54,719,000 and total debts of $82,108,000.

HAWAIIAN AIRLINES: IRS Objects to Trustee's 2nd Amended Joint Plan ------------------------------------------------------------------The U.S. Internal Revenue Services filed an objection with the U.S. Bankruptcy Court for the District of Hawaii against the confirmation of the Second Amended Joint Plan of Reorganization filed on Oct. 4, 2004, by Hawaiian Airlines, Inc.'s chapter 11 Trustee Joshua Gotbaum, the Official Committee of Unsecured Creditors, Hawaiian Holdings, Inc., RC Aviation LLC and HHIC, Inc.

On Aug. 26, 2004, the IRS filed tax claims totaling $128,560,412. In Dec., the IRS amended its claim and lowered it to $89,365,151. The Trustee objected to this claim. A hearing on this objection will be held on Friday, Jan. 14, 2005.

According to the IRS, Hawaiian Airlines and its affiliates filed their income tax return for 2003 in Sept. 2004. The Plan states that the bar date for administrative claims is 30 days after the Effective Date. The Government says it should not be bound by a bar date that's so short without the opportunity to determine the correctness of the 2003 tax return. Also, the bar date provision will present problems should there be any unfiled tax returns at that time.

The IRS complains that the Plan fails to provide for default remedies should the Debtors fail to make any installment payment required under the Plan within 30 days after it becomes due. The discharge of taxes, the IRS stresses, should not occur unless all priority taxes are paid in full and the Debtors remain liable for all unpaid tax claims after confirmation.

The Government questions the viability of the Plan since it provides that the amount for disputed claims should not exceed $22 million when the IRS' unsecured tax claim exceeds $38 million.

Headquartered in Honolulu, Hawaii, Hawaiian Airlines, Inc., -- http://hawaiianair.com/-- is a subsidiary of Hawaiian Holdings, Inc. (Amex and PCX: HA). The Company provides primarily scheduled transportation of passengers, cargo and mail. Flights operate within the South Pacific and to points on the west coast as well as Las Vegas. Since the appointment of a bankruptcy trustee in May 2003, Hawaiian Holdings has had no involvement in the management of Hawaiian Airlines and has had limited access to information concerning the airline. The Company filed for chapter 11 protection on March 21, 2003 (Bankr. D. Hawaii Case No. 03-00817). Joshua Gotbaum serves as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented by Tom E. Roesser, Esq., and Katherine G. Leonard at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. When the Debtors filed for protection from its creditors, it listed $100 million in assets and $100 million in debts.

HAYES LEMMERZ: Wheel Group Names Don Septer Managing Director-------------------------------------------------------------Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) disclosed the appointment of Don Septer to the position of Managing Director of the Company's International Wheel Group's South American Operations, effective February 1, 2005. He was previously Director of Operations for Hayes Lemmerz' Brake and Powertrain Group. Mr. Septer will report directly to Fred Bentley, President of the Company's International Wheel Group.

Mr. Septer will have responsibility for the Company's International Wheel businesses with operations in Guarulhos and Santo Andre, Brazil and Chihuahua, Mexico. Mr. Septer replaces Nini Degani, who is leaving the Company to pursue other opportunities. Mr. Degani's assistance has been greatly appreciated.

Mr. Septer is an experienced manufacturing professional who began his career as a plant superintendent with the Kelsey-Hayes Company, in Romulus, Michigan. He also contributed to the successful manufacturing operations of Borg Warner, ITT Automotive, MascoTech Tubular and Newcor Powertrain.

"Don's experience in manufacturing and operations and previous leadership roles make him a valuable asset to our strategy," said Mr. Bentley. "In his new role, he will drive our strategic initiative to reinforce our position as a world-leading supplier of wheels."

HOLLYWOOD ENTERTAINMENT: Receives Nasdaq Delisting Notice--------------------------------------------------------- Hollywood Entertainment Corporation (Nasdaq:HLYW) received a letter from The Nasdaq Stock Market, Inc., on January 3, 2005, indicating that, because Hollywood did not comply with Marketplace Rules 4350(e) and 4350(g) requiring Hollywood to hold an annual shareholder meeting in 2004 and solicit proxies for that meeting, its securities are subject to delisting from The Nasdaq National Market at the opening of business on January 12, 2005. Hollywood has requested a hearing before a Nasdaq Listing Qualifications Panel to review the staff's determination and, under Nasdaq rules, the delisting of Hollywood's securities will be stayed pending the panel's decision.

Hollywood did not hold an annual shareholder meeting in 2004 because it anticipated that a date for a special shareholders meeting to approve Hollywood's acquisition by affiliates of Leonard Green & Partners, L.P., would have been set before the end of 2004. The special shareholders meeting for the LGP transaction was delayed however, because of Hollywood's efforts to pursue a superior sale transaction. Hollywood is prepared to take any steps required by Nasdaq to avoid delisting. Nevertheless, the Nasdaq hearing panel may not grant Hollywood's request for continued listing.

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As reported in the Troubled Company Reporter on Aug. 10, 2004, Standard & Poor's Ratings Services' ratings for Hollywood Entertainment Corporation, including the 'B+' corporate credit rating, remain on CreditWatch with negative implications. The ratings were initially placed on CreditWatch March 29, 2004, when Hollywood had announced it entered into a definitive merger agreement to be acquired by an affiliate of Leonard Green & Partners L.P. Wilsonville, Oregon-based Hollywood Entertainment operates more than 1,900 Hollywood Video stores in 47 states and approximately 600 Game Crazy video game specialty stores.

This CreditWatch update follows the announcement that Leonard Green & Partners has informed Hollywood Entertainment that it believes the financing condition to consummate the merger will not be satisfied due to industry and market conditions. Hollywood and a special committee of its board of directors are currently considering the company's alternatives to determine the course of action that would be in the best interest of shareholders. Standard & Poor's will review any proposed transaction and its impact on the company's credit quality.

"Hollywood's operating performance has been under pressure since the second quarter of 2003 due to increased costs related to the expansion of the Game Crazy business (video games) and a lack of sales leverage in the video rental business," said Standard & Poor's credit analyst Diane Shand. "Profitability is expected to remain under pressure in 2004 given the weakness in the overall video rental industry and the company's continuing investments in Game Crazy." Hollywood is already leveraged, with total debt to EBITDA of 4.2x before any additional transactions.

IESI CORP: 99.7% of Noteholders Agree to Amend 10-1/4% Indenture----------------------------------------------------------------IESI Corporation has determined the price for its previously announced tender offer and consent solicitation for its 10-1/4% Senior Subordinated Notes due 2012. The Notes are being tendered pursuant to the Company's Offer to Purchase and Consent Solicitation Statement, dated November 29, 2004, which more fully sets forth the terms and conditions of the cash tender offer to purchase any and all of the $150,000,000 outstanding principal amount of the Notes and the consent solicitation to eliminate substantially all of the restrictive and reporting covenants, certain events of default and certain other provisions contained in the indenture governing the Notes. As of 5:00 p.m., New York City time, on January 5, 2005, the Company had received tenders and consents for approximately 99.7% of the outstanding principal amount of the Notes. The percentage of consents received exceeds the requisite consents needed to amend the indenture governing the Notes.

If the tender offer expires at the expiration date and time as currently scheduled (9:00 a.m., New York City time on January 21, 2005, unless extended), the Total Consideration (as that term is defined in the Offer to Purchase) will be $1,187.87 for each $1,000 principal amount of Notes tendered and accepted for payment in accordance with the terms of the Offer to Purchase.

The Total Consideration includes a consent payment of $20.00 for each $1,000 principal amount of Notes. All holders who validly tender their Notes pursuant to the Offer to Purchase prior to the expiration time will receive the Total Consideration. In addition, each validly tendering holder of Notes will be paid accrued and unpaid interest, if any, from the last interest payment date up to, but not including, the payment date. The payment date for Notes validly tendered and accepted for payment is expected to be Friday, January 21, 2005, unless the tender offer is extended or earlier terminated.

The Tender Offer Consideration (as that term is defined in the Offer to Purchase) for the Notes was determined by reference to a fixed spread of 75 basis points over the bid side yield to maturity on the 3.125% U.S. Treasury Note due May 15, 2007 as of 10:00 a.m., New York City time, on January 6, 2005.

About the Company

IESI is one of the leading regional, non-hazardous solid waste management companies in the United States and has grown rapidly through a combination of strategic acquisitions and internal growth. IESI provides collection, transfer, disposal and recycling services to 272 communities, including more than 560,000 residential customers and 56,000 commercial and industrial customers, in nine states.

* * *

As reported in the Troubled Company Reporter on Dec. 20, 2004, Standard & Poor's Ratings Services raised its ratings on waste management company IESI Corp. to 'BB' from 'B+' following a review of the proposed purchase of IESI by BFI Canada Income Fund (the fund). Standard & Poor's also assigned its 'BB' senior secured debt rating to the company's proposed US$375 million senior secured credit facilities, and a recovery rating of '2' to the facilities, indicating a substantial recovery of principal (80%-100%) in a post-default scenario. At the same time, the ratings were removed from CreditWatch where they were placed Nov. 30, 2004. The outlook is currently stable.

INDYMAC HOME: Moody's Junks Three Asset-Backed Certificate Classes------------------------------------------------------------------Moody's Investors Service has downgraded nine certificates issued by IndyMac Home Equity Mortgage Loan Asset Backed Trust, Series SPMD 2000-C, 2001-A and 2001-B. The certificates have been on review for downgrade. One of the certificates from the IndyMac 2001-B transaction being downgraded, the BF class, will also remain on review for downgrade pending the liquidation of loans classified as REO.

The securitizations are backed by subprime mortgage and manufactured housing loans that were originated by IndyMac Bank F.S.B.

The certificates are being downgraded due to higher-than-anticipated rates of default on the loans backing the certificates and by the low rates of recovery realized on the sale of repossessed manufactured homes. The erosion of credit support and continued pipeline of seriously delinquent loans will likely contribute to ongoing weak pool performance.

The transactions have lender-paid mortgage insurance which may reduce the severity of loss associated with many of the riskier loans. The mortgage insurance may not, however, fully insulate investors against the losses associated with defaulted loans.

IndyMac Bank F.S.B. is servicing the transaction and Deutsche Bank National Trust Company is the trustee.

Series 2000-C; Class MF-2, downgraded to Ca from B2 Series 2000-C; Class BV, downgraded to Caa2 from B2 Series 2001-A; Class AF-5, downgraded to A1 from Aa2 Series 2001-A; Class AF-6, downgraded to A1 from Aa2 Series 2001-A; Class MF-1, downgraded to Ba3 from Baa3 Series 2001-A; Class MF-2, downgraded to Ca from Caa3 Series 2001-A; Class MV-2, downgraded to Ba3 from Baa2 Series 2001-A; Class BV, downgraded to B1 from Ba2 Series 2001-B; Class BF, downgraded to B2 from Baa2

INTERNATIONAL SHIPHOLDING: Completes $40M Public Equity Offering----------------------------------------------------------------International Shipholding Corporation (NYSE:ISH) has completed its public offering of $40 million of its 6% Convertible Exchangeable Preferred Stock.

The preferred stock, which has a liquidation preference of $50 per share, will accrue cumulative quarterly cash dividends from the date of issuance at a rate of 6% per annum. The preferred stock is initially convertible into two million shares of ISH common stock, equivalent to an initial conversion price of $20.00 per share of ISH common stock and reflecting a 34% conversion premium to the $14.90 per share closing price of ISH's common stock on the New York Stock Exchange on December 29, 2004.

The underwriter for the offering was Ferris, Baker Watts, Incorporated, which has an option, exercisable at any time on or before January 28, 2005, to purchase up to an additional $4.0 million of the preferred stock to cover over-allotments, if any. All shares of the preferred stock, which is a new series of ISH's capital stock, were sold by ISH.

The preferred stock will be listed on the NYSE under the symbol "ISH Pr." ISH expects that trading in the preferred stock will commence no later than February 7, 2005.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission and has become effective. This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About the Company

International Shipholding Corporation operates a diversified fleet of United States and foreign flag vessels that provide international and domestic maritime transportation services to commercial and governmental customers primarily under medium- to long-term charters or contracts through its subsidiaries

* * *

As reported in the Troubled Company Reporter on Aug. 04, 2004, Standard & Poor's Ratings Services lowered its corporate credit rating on International Shipholding Corp. to 'B+' from 'BB-' and senior unsecured rating to 'B-' from 'B'. The outlook is stable.

"The rating action reflects concerns that International Shipholding Corp.'s financial profile, while improving gradually, will remain below previous expectations and at levels more consistent with the revised rating," said Standard & Poor's credit analyst Kenneth L. Farer. The New Orleans, Louisiana-based shipping company has about $300 million of lease-adjusted debt.

INTERNATIONAL STEEL: New USWA Trust Fund to Benefit Union Retirees------------------------------------------------------------------The United Steelworkers of America said retirees who lost health care benefits in four steel company bankruptcies will have a measure of that coverage restored March 1, through an innovative trust fund bargained by USWA and International Steel Group, Inc. (NYSE:ISG).

"Nothing can undo the damage inflicted by the termination of retiree health care benefits," said USWA President Leo W. Gerard, "but we could - and did - negotiate a commitment that our retirees will not be forgotten.

"Today, we are pleased to announce the first step in keeping that promise, a new prescription drug program for USWA retirees from LTV, Bethlehem Steel, Acme Metals and Georgetown Steel," he said.

The union's December 2002 collective bargaining agreement with ISG established an innovative trust fund - the ISG Voluntary Employees' Beneficiary Association (ISG VEBA) - for the sole purpose of restoring a measure of coverage for retirees, surviving spouses and their dependents who lost health care benefits as a result of the bankruptcy and liquidation of the four companies.

The ISG VEBA is funded by contributions from ISG, based on company earnings and steel tonnage. Benefits are jointly determined by ISG and the USWA, depending on funds available in the trust and the needs of eligible retirees.

"The program was not designed to restore everything that was taken away from our retirees in bankruptcy court," explained David McCall, Director of USWA District 1 and the union's chief negotiator with ISG. "Our goal was to provide a meaningful, ongoing benefit, as quickly as possible, that meets one of our retirees' most urgent needs."

The ISG VEBA has projected assets of approximately $180 million as of the end of 2004, with continuing contributions required from ISG through 2008. In contrast, Bethlehem Steel's salaried retirees who also lost health coverage have received $2.7 million in a settlement approved by the bankruptcy court.

The Steelworker-negotiated VEBAs at ISG and other steel companies are historic in being the first ever to restore benefits to retirees who had worked for bankrupt or liquidated companies that had been purchased by new firms.

About the Company

ISG is one of the largest integrated steel producers in North America and among the top ten globally. Since being formed in April 2002, it has grown rapidly by acquiring the steel making assets of LTV, Acme Steel, Bethlehem Steel, Weirton Steel and Georgetown. ISG has annual total raw steel production capacity of approximately 20 million tons and is targeting 2004 revenues of approximately $9 billion.

* * *

As reported in the Troubled Company Reporter on Oct. 29, 2004, Moody's Investors Service placed the debt ratings of Ispat Inland Inc., (Senior Implied B3) and its affiliate Ispat Inland U.L.C. under review for possible upgrade. In a related action, Moody's placed the debt ratings of International Steel Group Inc. (ISG -- Senior Implied Ba2) under review for possible upgrade.

INTERSTATE BAKERIES: Court Okays Calif. Property Sale to C. Coseo----------------------------------------------------------------- As of the Petition Date, Interstate Bakeries Corporation and its debtor-affiliates owned numerous parcels of commercial real estate around the country. As a part of their reorganization, the Debtors continue to evaluate all owned and leased real estate as part of their efforts to maximize the value of their businesses and assets.

According to J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP, in Chicago, Illinois, the Debtors have initiated a systematic review of opportunities to cut costs and dispose of surplus assets. As part of this initiative, the Debtors determined that the efforts that had been undertaken prepetition to sell a certain property at 1401 Imperial Avenue in San Diego, California, should be continued and concluded.

The Debtors have engaged the services of Colliers International, a broker specializing in the sale of real property, to assist them in the sale and marketing of the California Property. The Debtors have agreed to compensate the Broker 6% of the Purchase Price up to $1,000,000 and 5% of the Purchase Price to the extent it exceeds $1,000,000 pursuant to an Exclusive Listing Agreement- Sale between the Debtors and the Broker.

After exploring several alternatives and significant prepetition marketing efforts, the Debtors decided to proceed with the Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate, as amended by the First Amendment to Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate, which they entered into with Chris Coseo.

Pursuant to the Sale Agreement, the Debtors agreed to sell the Property to Mr. Coseo for $1,100,000. Mr. Coseo has deposited $100,000, which is being held by the escrow agent until all conditions to closing are satisfied by the Debtors. The sale of the Property to Mr. Coseo will include all of the Debtors' rights, title and interests in and to the real property and any buildings, fixtures or equipment permanently attached to it. The Debtors will deliver good and marketable fee simple title to the Land and Improvements, free and clear of liens, other than Permitted Exceptions. The Property is being sold "as-is, where- is," with no representations or warranties, reasonable wear and tear and casualty and condemnation expected.

At the Debtors' behest, the Court authorizes and approves the sale of the Debtors' interest in the Property to Mr. Coseo and the payment of a commission to Colliers.

Headquartered in Kansas City, Missouri, Interstate BakeriesCorporation is a wholesale baker and distributor of fresh bakedbread and sweet goods, under various national brand names,including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),Merita(R) and Drake's(R). The Company employs approximately32,000 in 54 bakeries, more than 1,000 distribution centers and1,200 thrift stores throughout the U.S.

IWO HOLDINGS: New Entity Raises $232.7 Mil. from Private Placement------------------------------------------------------------------IWO Escrow Company has raised gross proceeds of $232.7 million through a private placement of its senior secured floating rate notes and senior discount notes. This offering is being conducted as part of a series of transactions intended to reorganize the capital structure of IWO Holdings, Inc. Upon completion of such reorganization, IWO Escrow Company will be merged with and into IWO Holdings, Inc. Proceeds from the offering have been placed in escrow pending consummation of the reorganization.

The securities offered have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States, absent registration or an applicable exemption from such registration requirements.

Based in Albany, New York, IWO Holdings is a wireless network partner of Sprint Corp. with franchise area in the northeastern US including 6.3 million people, and LTM revenues of $184 million.

* * *

As reported in the Troubled Company Reporter on Dec. 15, 2004, Standard & Poor's Ratings Services assigned its 'CCC+' corporate credit rating to IWO Escrow Co. The outlook is positive. The company is a newly formed entity that will be merged into IWOHoldings, Inc., an affiliate of Sprint PCS, after IWO Holdingscompletes a prepackaged Chapter 11 bankruptcy reorganization.

A 'CCC+' rating and a recovery rating of '3' were assigned to IWOEscrow's proposed $150 million senior secured floating-rate notesdue 2012. The '3' recovery indicates the expectation for ameaningful (50%-80%) recovery of principal in the event of adefault.

KAISER ALUMINUM: Jan. 21 is Intercompany Claims Discovery Cut-Off-----------------------------------------------------------------To recall, the Kaiser Aluminum Corporation, its debtor-affiliates and the Official Committee of Unsecured Creditors have reached an agreement to resolve a myriad of complex issues relating to the treatment of intercompany claims among the Debtors. The disposition of the Intercompany Claims is one of the key issues that must be addressed for the Debtors to proceed with the formulation and promulgation of plans of reorganization and liquidation.

All the various creditor constituencies on the Creditors Committee support the Intercompany Settlement Agreement. Additionally, in support of the Debtors' efforts toward achieving ultimate resolution of their cases, the Debtors' postpetition lenders have agreed to amend the credit facility to accommodate the terms and conditions of the Intercompany Settlement Agreement. Although at this juncture, the Official Committee of Asbestos Claimants,Martin J. Murphy as the legal representative for future asbestos claimants, and Anne M. Ferazzi as the legal representative for theFuture Silica Claimants have not agreed with or consented to theIntercompany Settlement Agreement, the Debtors and the CreditorsCommittee anticipate having further discussions with the creditors and the Future Claimants representatives before the hearing on theIntercompany Settlement Agreement.

Objections to Bifurcation of Hearing

A. Debtors

The Debtors assert that the request by Martin J. Murphy, the legal representative for future asbestos claimants, and the Official Committee of Asbestos Claimants for an additional hearing to consider whether the ISA constitutes a sub rosa plan only creates the prospect of additional costs and Court time, rather than less.

The Debtors point out that extensive discovery has already been propounded and responded to. To date, the Debtors have produced or made available hundreds of thousands of pages of documents in response to requests of the Asbestos Committee and Asbestos Representative. The Creditors Committee, likewise, has produced documents responsive to requests by the Asbestos Committee and Asbestos Representative.

More important, the Debtors say, the sub rosa issue cannot just be conveniently severed and considered separately. For the Court to adjudicate the sub rosa issue, the Debtors and the Official Committee of Unsecured Creditors will need to present all or substantially all of their case-in-chief so that the Court has a complete understanding of:

-- the numerous claims and issues resolved by the ISA;

-- the reasons for the various compromises embodied in the ISA;

-- the structure of the ISA; and

-- the reasons therefore and the effect of the Intercompany Claims Settlement on the Debtors' various estates.

An additional hearing, the Debtors believe, will only require the Court and the parties to spend additional time on the issue for no real benefit or purpose. The request for a separate hearing on the sub rosa issue is simply a "request for two bits at the apple and should be denied."

B. Creditors Committee

The Official Committee of Unsecured Creditors agrees with the Debtors that bifurcation of the Evidentiary Hearing is inappropriate, unnecessary and will not provide the Court, the estates or the parties with any type of cost or time benefit. The purported time and cost savings asserted by the Asbestos Committee are illusory. The Creditors Committee notes that the Asbestos Committee and the Asbestos Representative's arguments assume that the hearing will be concluded in one day and the Court will rule immediately on the issue.

An analysis of the sub rosa issue in isolation is highly inappropriate because the Court should consider all of the facts surrounding the negotiation process and the terms of the ISA as well as all of the factual and legal arguments supporting the resolution of the intercompany claims issues incorporated in the Settlement before rendering a decision. This is particularly true, the Committee says, given the highly complex nature of the Debtors' reorganization process, the complex factual and legal issues surrounding the ISA and the effect an approval or disapproval of the ISA will have on other facets of the Debtors' cases.

The Creditors Committee explains that undertaking a complete analysis of all the issues surrounding the ISA is consistent with -- if not mandated by -- the jurisprudence detailing the standards for approving settlements under Rule 9019(a) of the Federal Rules of Bankruptcy Procedure in the Third Circuit. The Committee notes that in Myers v. Martin (In re Martin), 91 F.3d 389, 394 (3d Cir. 1996), the court held that to determine where a debtor's settlement is appropriate, courts weigh:

* the probability of success in litigation,

* the likely difficulties in collection,

* the complexity of the litigation involved, and

* the expense, inconvenience and delay necessarily attending it and the paramount interests of the creditors.

The Creditors Committee also insists that the ISA is not a sub rosa plan. A cursory review of the Settlement, the Committee points out, reveals that it simply provides for the release of certain intercompany claims among the various estates and authorizes the payment of certain amounts between various estates. The ISA does not dictate the terms of a future reorganization plan. It is not fixing or even determining distribution to the Debtors' creditors and does not impair any creditor's claim against any of the Debtors, or restrict any creditor's right to vote as it sees fit on a subsequent plan.

C. U.S. Bank

U.S. Bank, N.A., is the indenture trustee for approximately $400,000,000 in principal amount of senior public notes issued by Kaiser Aluminum & Chemical Corporation. The Senior Notes are guaranteed by KACC's subsidiaries.

U.S. Bank asserts that the requested bifurcation of the Evidentiary Hearing would be inefficient, illogical and will only result in a waste of time and money. U.S. Bank believes that the ISA is a fair and necessary compromise of claims between separate bankruptcy estates and is not a sub rosa plan.

U.S. Bank suspects that the Asbestos Committee's objection to the ISA and request to bifurcate the Evidentiary Hearing are part of the Committee's efforts to prevent the separate bankruptcy estates of Alpart Jamaica, Inc., Kaiser Jamaica Corp., and Kaiser Alumina Australia Corp. from concluding their bankruptcy liquidations and preventing the separate creditors of the three KACC Subsidiaries from obtaining prompt distribution from the liquidations. By attempting to delay the administration of the Subsidiaries' bankruptcy estates until KACC emerges, the Asbestos Committee hopes to extract economic concessions for its constituencies from the Senior Notes holders who desire a plan distribution from the three Subsidiaries in the near future.

U.S. Bank explains that the holders of the Senior Notes are the largest creditors of and economic stakeholders in each of the separate bankruptcy estates of the three KACC Subsidiaries. By virtue of their economic stake, the Senior Noteholders have a strong interest in having the Subsidiaries' bankruptcy estates promptly administered.

U.S. Bank reminds the Court that the Asbestos Claimants are only creditors of KACC. Therefore, the Asbestos Claimants are only entitled to receive distribution from KACC's estate based on a fair settlement of claims between KACC, on the one hand, and its Subsidiaries, on the other.

Hearing on Jan. 31 in Pittsburgh

Judge Fitzgerald will convene a hearing January 30, 2005, at 10 a.m. in Pittsburgh, Pennsylvania, to consider approval of the ISA.

Any party may file a hearing brief in response to the request for approval of the ISA by January 24, 2005. No reply briefs may be filed.

Each party will provide the other parties with reports for experts retained under Rule 26(a)(2) three days prior to any expert deposition. Expert reports must be filed with the Court no later than January 24, 2005.

KEY ENERGY: Soliciting Consents to Extend Reporting Deadlines------------------------------------------------------------- Key Energy Services, Inc. (NYSE: KEG) said it is soliciting consents from the holders of its outstanding 6-3/8% senior notes due 2013 and 8-3/8% senior notes due 2008, to extend until March 31, 2005 the period in which the Company must deliver its 2003 10-K and 2004 10-Q reports.

The Company had received notice from the trustee that the Company is in breach of the financial reporting covenants contained in the indentures, and stating that unless the deficiency is remedied within 60 days, an event of default would occur under the indentures. Unless the deficiency is cured or waived within the 60-day cure period, the trustee or holders of 25% of the outstanding principal amount of either series of notes will have the right to accelerate the maturity of that series of notes.

The Consent Solicitation is scheduled to expire at 5:00 p.m. (EST) on January 18, 2005, unless extended or terminated earlier. Holders of Notes who deliver their consent on or prior to 5:00 p.m. (EST) on January 18, 2005, unless extended or terminated earlier, will be eligible to receive a consent payment of $2.50 per $1,000 principal amounts of Notes validly consented. In addition, the Company will pay within three business days of each of February 1, 2005 and March 1, 2005 to each consenting holder, an additional $2.50 in cash for each $1,000 principal amount of consenting notes if the Company has not provided, by such dates, the 2003 10-K and 2004 10-Q reports.

The Consent Solicitation is conditioned upon the satisfaction of certain conditions, including that consents for a majority of each particular series of notes must be received, a majority of the other series of notes must be received and the supplemental indenture for both series must be executed. A more comprehensive description of the Consent Solicitation and its conditions can be found in the Consent Solicitation Statement.

The Company has retained Lehman Brothers to serve as the Solicitation Agent and D.F. King & Co., Inc., to serve as the Information Agent and Tabulation Agent for the Offer. Requests for documents may be directed to:

Questions regarding the solicitation of consents may be directed to Lehman Brothers, at (800) 438-3242 (toll-free) or (212) 528-7581, Attention: Liability Management.

This announcement is not an offer to purchase or sell, a solicitation of an offer to purchase or sell or a solicitation of consents with respect to any securities. The solicitation is being made solely pursuant to the Consent Solicitation Statement dated January 7, 2005.

The Company intends to hold a conference call today, January 11, 2005 at 4:30 PM EST, at which time it will provide a restatement update and operations review.

About the Company

Key Energy Services, Inc., is the world's largest rig-based well service company. The Company provides oilfield services including well servicing, contract drilling, pressure pumping, fishing and rental tools and other oilfield services. The Company has operations in all major onshore oil and gas producing regions of the continental United States and internationally in Argentina and Egypt.

Midland, Texas-based Key had about $485 million of total debt outstanding as of June 30, 2004.

KNOWLEDGE LEARNING: Moody's Downgrades Sr. Implied Rating to B1---------------------------------------------------------------Moody's Investors Service concluded the review for possible downgrade of the ratings of Knowledge Learning Corporation and Kindercare Learning Centers, Inc., which was initiated Dec. 17, 2004 due to the pending acquisition of Kindercare by KLC for $550 million in cash and the assumption of debt for a total of approximately $1.1 billion. The senior implied of KLC was downgraded to B1 from Ba3 and the senior implied of Kindercare was confirmed at B1. At the same time Moody's upgraded the rating on the proposed senior secured credit facility of the combined company to B1 from B2 which is expected to close shortly. The rating outlooks are stable.

The downgrade of the ratings of KLC reflects the pro forma additional leverage of the combined company despite a cash equity injection of $200 million and the impact of large cash restructuring costs for 2005. Moody's expects rent adjusted leverage, measured as debt plus 8 times rent to EBITDAR (adjusted for synergies), to be 5.7 times by the end of 2005 with free cash flow to total debt at about 8.2% by year-end 2005.

The ratings also reflect:

-- the benefits of the combined entity, including a strong market position as the leading for-profit provider of early childhood education services;

-- expected cost improvements of up to $30 million due to the streamlining of overhead, including personnel;

-- the potential to increase occupancy and profitability in certain markets through the rationalization of duplicate facilities;

-- the introduction of new products and services and the expansion of existing businesses; and

-- the management team's commitment and focus on improving EBIT return on assets.

The upgrade of the rating on the KLC's proposed 7-year, $640 million guaranteed senior secured credit facility reflects Moody's understanding of the positive impact of potential real estate strategies, which if considered in light of the June 2005 call date on the $300 million Commercial Mortgage Pass-Through Certificates of Kindercare, should provide the issuer with greater financial flexibility and quicker deleveraging than previously thought.

The rating outlooks are stable. Moody's expectation of the company's level of free cash flow generation and leverage places the issuer in the lower range of the B1 rating for the first year of consolidated operations. Should the company not be able to meet targeted improvements in free cash flow and debt reduction, the ratings could be pressured. In addition, Moody's will closely watch the level of both operating leases and the secured mortgage loan in relationship to total debt to monitor the potential for effective subordination of creditors to these lenders.

The B1 rating on the proposed $640 million senior secured credit facility reflects size of the credit facility in the capital structure as well as its subordination to the $300 million ($295 million current balance) CMBS facility which in a distress scenario has prior claim on the cash flow and on the assets of the mortgaged real estate.

The proposed credit facility will consist of a 5-year, $100 million revolving credit and a 7-year, minimally amortizing $540 million term loan. The borrower will be KLC. The borrowings will be guaranteed by the direct operating subsidiaries of KLC (including Kindercare) as well as by its parent, Knowledge Schools, Inc., which is a holding company for the KLC asset. The facility will be secured by first priority perfected liens on substantially all tangible and intangible property, excluding the 475 Kindercare centers pledged to the $300 million CMBS facility. The latter facility has a prior claim over the bank facility on cash generated from the pledged centers as well as on the proceeds from the disposition of pledged assets.

Moody's notes that the existing $179 million issue of 9.5% senior subordinated notes due 2009 of Kindercare contains change in control provisions which will require the refinancing of this debt. Upon refinancing, the ratings on the existing credit facilities of KLC and Kindercare and the Kindercare subordinated notes will be withdrawn. Upon the closing of the Kindercare acquisition, the senior implied rating, the issuer rating and the rating outlook of Kindercare will be withdrawn.

Knowledge Learning Corporation, headquartered in Golden, Colorado is a leading provider of childcare services. It operates 801 centers in 33 states through its three business segments: Early Childhood Education, School Partnerships, and Distance Learning. The company acquired Aramark Educational Resources, in May of 2003. Combined pro forma revenue for fiscal year 2003 was $612 million.

Kindercare Learning Centers, headquartered in Portland, Oregon is a leading provider of early childcare services with 1225 centers across 39 states. The company operates community centers and employer sponsored centers under the Kindercare and Mulberry brand names. Total revenue for the last twelve months ending September 2004 was approximately $867 million.

LAIDLAW INT'L: Shareholders to Elect Directors in Feb. 8 Meeting----------------------------------------------------------------Kevin E. Benson, Laidlaw International, Inc.'s President and Chief Executive Officer, relates that the purpose of the 2005 Annual Meeting of Stockholders on February 8, 2005, will be to:

The current terms of office of directors Richard P. Randazzo, 60, and Carroll R. Wetzel, 61, will expire at the Annual Meeting. However, the company's Nominating and Governance committee has nominated Messrs. Randazzo and Wetzel to serve another term as directors.

In addition, the vacancy created by the resignation of Vicki O'Meara from the Board in September 2004 will be filled by a majority of the members of the Board presently in office or voted into office at the Annual Meeting.

Laidlaw's Board of Directors has fixed the close of business on December 16, 2004, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.

Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc., -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003.

* * *

As reported in the Troubled Company Reporter on Dec. 27, 2004, Moody's Investors Service has placed the long-term debt ratings of Laidlaw International, Inc., under review for possible upgrade. The review is prompted by the recent announcement by the company that it had entered into a definitive agreement to sell both of its healthcare businesses to Onex Partners LP, an affiliate of Onex Corporation, for $820 million. Net proceeds after fees and assumption of a small amount of debt by the buyer is estimated at $775 million, with a majority of the proceeds intended to be used to repay substantial levels of Laidlaw's existing debt. Moody's has also assigned a Speculative Grade Liquidity Rating of SGL-2 to Laidlaw International, Inc. As part of the rating action, Moody's has reassigned to Laidlaw International, Inc., certain ratings, including the senior implied and senior unsecured issuer ratings, originally assigned at Laidlaw, Inc., in order to reflect more appropriately the company's current organizational structure.

As reported in the Troubled Company Reporter on Dec. 9, 2004, Standard & Poor's Ratings Services placed its ratings, including its 'BB' corporate credit rating, on Laidlaw International Inc. on CreditWatch with positive implications. The rating action follows Laidlaw's announcement that it has entered into definitive agreements to sell both of its health care companies, American Medical Response and Emcare, to Onex Partners L.P. for $820 million. Laidlaw expects to receive net cash proceeds of $775 million upon closing of the transaction, which is expected by the end of March 2005. Naperville, Illinois-based Laidlaw currently has about $1.5 billion of lease-adjusted debt.

LYNX THERAPEUTICS: Receives Anticipated Nasdaq Delisting Notice--------------------------------------------------------------- Lynx Therapeutics, Inc. (Nasdaq:LYNX) received a Nasdaq Staff Determination letter on Jan. 4, 2005, indicating that its securities are subject to delisting from the Nasdaq SmallCap Market based on the Company's failure to hold an annual meeting of stockholders by Dec. 31, 2004, in accordance with Nasdaq Marketplace Rule 4350(e) and solicit proxies and provide proxy statements to Nasdaq in accordance with Nasdaq Marketplace Rule and 4350(g).

"We will appeal this decision as we plan to hold an annual meeting of stockholders during the current quarter to vote on our proposed business combination with Solexa," stated Mary L. Schramke, Ph.D., Lynx's acting chief executive officer. "This notice does not come as a surprise as we elected to avoid the costs of holding multiple annual stockholders' meetings in a relatively short time period. Following our planned upcoming stockholders' meeting, we believe Lynx will again be in full compliance with Nasdaq listing requirements. In the meantime, our appeal will stay Nasdaq's decision to delist, and concurrently we have filed an application for initial listing of our shares following consummation of the proposed transaction with Solexa."

Lynx intends to request a hearing before a Nasdaq Listing Qualifications Panel to review the Staff's determination. However, there can be no assurance that the Listing Qualifications Panel will grant Lynx's request for continued listing. Lynx's common stock will continue to be listed on the Nasdaq SmallCap Market pending a final ruling. Lynx has delayed holding its annual meeting until its registration statement on Form S-4, initially filed with the Securities and Exchange Commission on October 29, 2004, as amended, has been approved by the SEC and has tentatively scheduled its annual meeting for February 17, 2005 in order to, among other things, approve the proposed transaction with Solexa Limited. Pending approval by the Lynx stockholders and acceptance by the Solexa shareholders, the transaction is expected to close in the first quarter of 2005. Lynx has applied for listing of its shares on the Nasdaq SmallCap Market following consummation of the proposed transaction with Solexa and anticipates that trading will continue on the Nasdaq SmallCap Market on a post-closing basis. The Registration Statement, as amended, is available at the SEC's Web site at http://www.sec.gov/

On September 28, 2004, Lynx and United Kingdom-based Solexa Limited announced the signing of a definitive agreement providing for the combination of the two companies. On January 5, 2005 Lynx filed a second amendment to the Registration Statement on Form S-4 regarding the proposed transaction with Solexa and other matters with the Securities and Exchange Commission, which is available at the SEC Web site at http://www.sec.gov/ The transaction, which is subject to approval by the Lynx stockholders and acceptance by the Solexa shareholders, is expected to close in the first quarter of 2005.

About the Company

Lynx believes that it is a leader in the development and application of novel genomic analysis solutions. By "novel," Lynx means next generation technology that will take the engagement of thought leaders before broader commercial acceptance can occur. Lynx's Massively Parallel Sequencing System (MPSS(TM)) consists of proprietary instrumentation and software that are used to analyze millions of DNA molecules in parallel, enabling genome structure characterization at an unprecedented level of resolution. As applied to gene expression analysis, MPSS(TM) provides comprehensive and quantitative digital information important to modern systems biology research in the pharmaceutical, biotechnology and agricultural industries. For more information, visit Lynx's Web site at http://www.lynxgen.com/

* * *

Going Concern Doubt

In its Form 10-Q for the quarterly period ended Sept. 30, 2004, filed with the Securities and Exchange Commission, Lynx Therapeutics' accountants, Ernst & Young LLP, included a going concern opinion in its financial statements for the year ended Dec. 31, 2003, due to losses incurred since inception.

These losses continue in 2004, with a $4.3 million net loss for the three months ended Sept. 30, 2004.

"We are considering various options, which include securing additional equity financing, obtaining new collaborators and customers and other strategic actions," the Company said in its SEC filing. "If we raise additional capital by issuing equity or convertible debt securities, our existing stockholders may experience substantial dilution. There can be no assurance that additional financing will be available on satisfactory terms, or at all. If we are unable to secure additional financing on reasonable terms, or are unable to generate sufficient new sources of revenue through arrangements with customers, collaborators and licensees, we will be forced to take substantial restructuring actions, which may include significantly reducing our anticipated level of expenditures, the sale of some or all of our assets, or obtaining funds by entering into financing or collaborative agreements on unattractive terms, or we will not be able to fund operations."

Multi-family properties present unique technological, management and marketing challenges, as compared to single-family homes - challenges the Company has a certain experience and expertise in overcoming. It seeks to differentiate itself from other multi-family service providers through a unique strategy of balancing the information and communication needs of today's MDU residents with the technology concerns of property managers and owners and providing the best overall service to both.

To accomplish this objective and to understand and meet the technology needs of these groups, the Company has partnered with DIRECTV,Inc., and have been working with large property owners and real estate investment trusts (REITs), such as:

Its Canadian operating company, MDU Communications Inc., was incorporated in March 1998. In November 1998, MDU Canada's shareholders sold all of their MDU Canada stock to Alpha Beta Holdings, Ltd., an inactive U.S. public reporting company, in exchange for Alpha Beta stock, and renamed it "MDU Communications International,Inc." Alpha Beta had been incorporated in Colorado in July 1995, but never conducted any significant business activities and was essentially inactive in November 1998.

In April 1999, the Company reincorporated MDU Communications International, Inc., in Delaware and MDU Canada became a wholly owned subsidiary and at its peak, had over 15,000 subscribers and seven offices across Canada. In March 2000, the Company formed MDU Communications (USA) Inc., a Washington corporation to conduct business in the United States.

In early 2001, the Company made a fundamental re-assessment of its business plan and determined that the most profitable markets lay in densely populated areas of the United States. The Company changed its corporate focus and business strategy from serving the entire North American MDU market, to several key U.S. markets, beginning with the Northeast United States.

To further this change, in 2001, it completed an agreement with Star Choice Television Network, Inc., for the sale of certain of its Canadian satellite television assets. As a result, by May 30, 2001, the Company relocated its operations and certain key employees to its New York Metro Area office in Totowa, New Jersey. MDU Communications International, Inc., now operates essentially as a holding company with MDU Canada and MDU USA as its wholly owned operating subsidiaries.

MDU Communications International, Inc., reported a net loss of $7,666,600 for the year ended Sept. 30, 2004, compared to a net loss of $2,117,707 for the year ended Sept. 30, 2003. The Company has incurred operating losses since inception. However, with consolidated operations in the most profitable U.S. markets, expansion into the military segment and efforts to position the Company to increase its subscriber base, the Company expects to be EBITDA positive in fiscal year 2005.

At Sept. 30, 2004, it had cash and cash equivalents of $4,705,722 compared to $507,775 at Sept. 30, 2003. The increase in cash position was primarily due to the net proceeds of November and May equity private placements.

MDU believes that it has sufficient cash resources to cover current levels of operating expenses and working capital needs for at least through Sept. 30, 2005. However, this is a capital-intensive business and continued growth is dependent partially on raising additional financing. There is no assurance that it will be successful in any of these initiatives.

The Company has incurred losses since inception and may incur future losses. To date, the Company has not shown a profit in its operations. As of the Company's year-end Sept. 30, 2004, it has accumulated losses of approximately $24,990,000. The Company does not expect to have profitable operations until sometime in fiscal year 2005, and it cannot assure that it will ever achieve or attain profitability. If it cannot achieve operating profitability, the Company may not be able to meet its working capital requirements, which could have a material adverse effect on its business and may impair its ability to continue as a going concern.

"We took this rating action after the Texas Department of Insurance ordered the company to be placed on temporary receivership based on financial insolvency," explained Standard & Poor's credit analyst Terence Tan.

On June 30, 2004, Metrowest had about $7 million in liabilities and only about $6.7 million in assets, resulting in total capital of approximately negative $330,000. Total projected capital as of Dec. 31, 2004, was about negative $1.4 million.

An insurer rated 'R' is under regulatory supervision owing to its financial condition. During the pending of the regulatory supervision, the regulators may have the power to favor one class of obligations over there or pay some obligations and not others. The rating does not apply to insurers subject only to non-financial actions such as market conduct violations.

MWAM CBO: Moody's Junks Two Floating Rate Note Classes Due 2031---------------------------------------------------------------Moody's Investors Service has taken rating actions on the following classes of notes issued by MWAM CBO 2001-1, LTD.:

(1) the U.S.$21,875,000 Class B Floating Rate Notes Due January 30, 2031, formerly rated Aa3 on watch for possible downgrade, is downgraded to Baa3, and remaining on watch for possible downgrade, and

(2) the U.S.$12,500,000 Class C-1 Floating Rate Notes Due January 30, 2031 and the U.S.$8,125,000 Class C-2 Fixed Rate Notes Due January 30, 2031, each formerly rated Ba1 on watch for possible downgrade, are each downgraded to Ca.

Moody's said the actions reflect Moody's determination that the overall deterioration to the credit quality of the underlying pool, with exposures to manufactured housing asset backed securities (greater than 10% of aggregate pool balance) and aircraft leasing securities (approximately 10% of aggregate pool balance), has increased the expected losses on the notes. Moody's further noted that in a rising interest rate environment, the ratings of the issuer's liabilities could face additional stress given the issuer's current portfolio and existing interest rate hedging features.

Issuer: MWAM CBO 2001-1, LTD.

Affected Classes of Notes:

* U.S.$21,875,000 Class B Floating Rate Notes Due January 30, 2031

-- Previous Rating: Aa3, on Watch for Downgrade -- New Rating: Baa3, on Watch for Downgrade

* U.S.$12,500,000 Class C-1 Floating Rate Notes Due January 30, 2031

-- Current Rating: Ba1, on Watch for Downgrade -- New Rating: Ca

* U.S.$8,125,000 Class C-2 Fixed Rate Notes Due January 30, 2031

-- Current Rating: Ba1, on Watch for Downgrade -- New Rating: Ca

NAAC REPERFORMING: Moody's Puts Low-B Ratings on Two Loan Certs.----------------------------------------------------------------Moody's Investors Service has assigned Aaa to B2 ratings to the senior and subordinate classes of the NAAC Reperforming Loan Remic Trust 2004-R3 mortgage pass-through certificates. The transaction consists of the securitization of FHA insured and VA guaranteed reperforming loans virtually all of which were repurchased from GNMA pools.

The credit quality of the mortgage loans underlying securitization is comparable to that of mortgage loans underlying subprime securitizations. However after the FHA and VA insurance is applied to the loans, the credit enhancement levels are comparable to the credit enhancement levels for prime-quality residential mortgage loan securitizations. The insurance covers a large percent of any losses incurred as a result of borrower defaults.

The rating of this pool is based on the credit quality of the underlying loans and the insurance provided by Federal Housing Administration (FHA) and the guarantee provided by Veterans Administration (VA). Specifically, about 84% of the loans have insurance provided by FHA while the rest of the loans have a guarantee provided by VA. The rating is also based on the transaction's cash flow and legal structure.

The notes are being offered in privately negotiated transactions without registration under the 1933 Act. The issuance was designed to permit resale under Rule 144A. Additional research is available on http://www.moodys.com/

NATIONAL CENTURY: Trust Asks Court to Disallow CSFB Claims----------------------------------------------------------Sydney Ballesteros, Esq., at Gibbs & Bruns, LLP, in Houston,Texas, relates that Credit Suisse First Boston acted as an underwriter or "Placement Agent" with respect to most recent issuances of notes by NPF VI, Inc., and NPF XII, Inc. CSFB also owned some of the outstanding notes of NPF VI and NPF XII.

CSFB acted in various roles as a financial advisor to NCFE, NPFVI and NPF XII, and in those capacities had significant influence and control over NPF VI and NPF XII's issuances of notes and related disclosures. CSFB also had influence and control over those entities' refinancing and repayment of notes and issuance of new notes to replace existing notes and reduce the exposure of some creditors at the expense of others. At the same time, CSFB had substantial non-public information concerning those programs, the notes and the underlying collateral.

The Court disallowed the Note Claims on April 27, 2004, on grounds that they were duplicative of the claims asserted by the Indenture Trustee. The Fee Claims were allowed in the reduced amount of $500,000, pursuant to the Fourth Amended Joint Plan, dated April 16, 2004.

Ms. Ballesteros argues that the other claims are objectionable because they are insufficiently detailed, explained or supported, and no calculation is provided verifying the amount or nature of the components of the claims.

Though CSFB's direct Note Claims were disallowed, CSFB seeks, by its status as a holder of Notes, to participate in the distributions by the Trust and Unencumbered Assets Trust and the VI/XII Collateral Trusts. Pursuant to the Plan, CSFB or any other holder of a disputed claim may tentatively participate in distributions until the disputed issue may be resolved.

Accordingly, the Trust and Erwin I. Katz, Ltd., as Trustee, ask the Court to disallow, subordinate or avoid the CSFB Claims, including CSFB's purported right or ability to participate in distributions as a holder of the Notes of NPF VI and NPF XII.

Ms. Ballesteros asserts that the Trust's request is warranted for four reasons:

(a) Equitable Subordination

CSFB engaged in inequitable conduct that has given it an unfair advantage and has resulted in injury to all other competing creditors of the Debtors and their estates.

In the event that any of CSFB's claims are allowed over the Trust's objections, the claims should be subordinated to the level of equity, so that CSFB will be entitled to collect on its claims only if and only after the Debtors' other creditors are paid in full on their claims. Thus, the CSFB Claims should be equitably subordinated pursuant to Section 510 of the Bankruptcy Code.

(b) Duplicative Claims

CSFB filed 32 [sic.] substantially identical proofs of claim, under three separate names and against virtually every Debtor. The description of claims is identical and each claim asserts the same claims for the same expenses, reimbursements, rights or debts.

(c) Unenforceable Claims

CSFB had extensive knowledge concerning the insolvency of NCFE, NPF VI and NPF XII. Nonetheless, CSFB orchestrated repeated debt issuance, taking fees, and ensuring itself purported contractual rights for fees and expenses and indemnity against the inevitable lawsuits that would occur when its scheme was revealed.

All of the CSFB Claims are unenforceable under applicable law, as they are subject to equitable defenses precluding recovery, under the doctrines of unjust enrichment, unclean hands and equitable estoppel.

(d) Avoidable Transfers

CSFB is the recipient of transfers avoidable under Sections 544, 547 and 548 of the Bankruptcy Code. CSFB has not repaid nor relinquished the fraudulent or preferential transfers. Thus, the CSFB Claims should be disallowed pursuant to Section 502(d) of the Bankruptcy Code.

Furthermore, the Trust asks the Court to:

(a) direct CSFB to disgorge any distributions already received through the bankruptcy process or pursuant to the Plan; and

(b) exclude CSFB from any future distributions from any of the Trusts established under the Plan.

NEP SUPERSHOOTERS: Moody's Rates $76 Million Term Loan at B1------------------------------------------------------------Moody's Investors Service assigned a B1 rating to NEP Supershooters, L.P.'s new $76 million first lien term loan facility and downgraded the $25 million second lien term loan facility to B3 from B2. Moody's also affirmed the senior implied and existing first lien ratings. The outlook remains stable. The downgrade of the second lien term loan is based on its increasing subordination to the first lien debt in NEP's capital structure. The proceeds of the transaction will be used to finance the acquisition of two of NEP's competitors in the mobile production business, National Mobile Television and U.K.-based Visions.

The ratings and outlook continue to incorporate the high financial and business risk of the company, the acquisition strategy and capital intensive nature of NEP's business offset by the increased exposure to the higher cash-generating mobile production unit business and the elimination of NEP's closest competitor in the U.S. While we believe that as a result of the transaction, NEP is likely to de-lever more slowly than previously anticipated, the acquisitions further solidify NEP's operations and competitive position in the high-end mobile facilities segment.

NEP Supershooters, L.P.:

Moody's assigned the following rating:

(i) a B1 to the $76 million senior secured term loan C.

Moody's downgraded the following ratings:

(i) $25 million 2nd lien term loan to B3 from B2, and (ii) senior unsecured issuer rating to Caa1 from B3.

Moody's affirmed the following ratings to NEP Supershooters, L.P.:

(i) a B1 on the $20 million senior secured revolving credit facility,

(ii) a B1 on the $140 million senior secured term loan B, and

(iii) a B1 senior implied rating.

The rating outlook is stable.

The ratings remain constrained by the likelihood of further debt-financed acquisitions, NEP's high leverage of 4.4 times EBITDA, modest interest coverage after capital expenditures and the potential for future capital expenditure requirements. Moody's notes that while NEP has a prominent market share in both mobile production facilities (Supershooters) and mobile and modular video systems (Screenworks), there are limited barriers to entry. Thus, it is our belief that NEP remains somewhat vulnerable to it's better-capitalized client base. Capital expenditures are likely to continue to pressure free cash flow generation, as NEP attempts to maintain its attractive pool of clients. The ratings are also constrained by the volatility of the business where organic cash flow growth remains dependent on replacement revenues for events that tend to be cyclical (i.e. Olympics, concert touring). Particularly, we note that concert touring experienced significant weakness in 2004, reducing the expected profitability at Screenworks.

The ratings benefit from the enhanced competitive position in the high-end mobile production business (NMT acquisition increases market share to 90% of the U.S. premier market), prominent market share with top television and cable and music customers, recurring, contracted revenue streams, and strong operating margins. We note that the acquisitions strengthen the operations of the Supershooter's segment by increasing the proportion of hi-definition facilities in its fleet, which demand a premium in the market. Further, certain of NEP's facility upgrades are contingent upon commitments from clients to pay higher rates. The ratings are also supported by the willingness of the sponsors and management to contribute equity to complete the acquisitions while maintaining leverage below 4.4x.

The stable outlook reflects our belief that the increase in leverage is offset by the benefits of the acquisitions. Additionally, it is our expectation that leverage will improve modestly over the near-term as NEP uses free cash flow to reduce debt. The outlook may be revised to negative if there are further large debt-financed acquisitions or continued softness in the music touring business in 2005 such that it has a material negative impact on leverage. The outlook may experience positive momentum if the growth in operating cash flow of the mobile productions business reduces leverage faster than Moody's anticipates.

The B1 rating on the 1st lien revolving credit and term loan facilities reflect the benefits of the credit agreement, including guarantees from the parent and all the domestic and foreign subsidiaries and a first priority lien on the collateral package. The B3 rating on the 2nd lien facility reflects its subordination to the sizeable, and now larger first lien portion of the capital structure. The ratings also recognize the debt protection measures within the credit agreement, including limitations on leverage and restrictions on capital expenditures that are not linked to new contracts.

Moody's believes that the coverage provided to secured lenders in a default scenario is likely to provide only modest cushion versus the company's current debt levels given the high proportion of intangible assets.

NEP Supershooters, L.P., a subsidiary of NEP Broadcasting, LLC, headquartered in Pittsburgh, Pa., is a leading national provider of outsourced media services, supporting the delivery of live and broadcast sports and entertainment events.

NEW ENGLAND: Moody's Affirms Long-Term Rating at Ba2----------------------------------------------------Moody's Investors Service has affirmed New England Center for Children's Ba2 long-term rating. The outlook for the rating is stable. The rating applies to $15.8 million of outstanding Series 1998 bonds issued through the Massachusetts Development Finance Agency.

Credit strengths are:

-- Established history and strong reputation in providing services, especially for autistic children

-- Very consistent operating history, expected to be sustained by largely government payors

-- Limited additional capital needs will keep leverage steady

Credit challenges are:

-- Thin levels of cash compared to debt or annual expenses -- Primary source of revenue is subject to state regulation

Opinion:

The New England Center for Children has continued to generate relatively consistent levels of operating surpluses and cash flow, with an operating cash flow margin of 6.5% in 2004 (fiscal year ending June 30, 2004). Although the operating margin of 2.2% in 2004 was slightly below prior year performance (2.6% in 2003 and 3.2% in 2002), year-to-date 5-month performance as of November, 2004 shows some moderate improvement in the year-to-date FY2005 period over the comparable 2004 period. Given the Center's reliance on stable government payors for the vast majority of revenues (primarily municipalities and the Commonwealth of Massachusetts), Moody's expects operating performance to remain stable. The Center responded well to a rate freeze by the Commonwealth for its residential programs in FY2004, by managing salary and other expenses to maintain its operating performance (salary expense is 75% of total operating expenses). The Commonwealth approved a 3.29% increase in rates for FY2005, but increases for FY2006 are still uncertain.

Liquidity remains thin with just 25 days of cash on hand at the end of FY2004, a total of $2.2 million. Given modest operating cash flow and mission driven budgeting, liquidity is unlikely to grow substantially.

Enrollment in the Center's primary programs (two residential and two day programs) has been steady with 127 residential students and 74 day students. The Center continues to report no difficulty in filling vacancies as they arise, as demand for its services is high. In addition, total census has grown from 205 students in 1998 to 237 students in 2005.

No significant expansion plans are anticipated at the Center's primary location and strategic efforts are focused on serving children outside of the Center's own facilities. For instance, management reports growth in its consulting business line and a private school classrooms program wherein schools contract with the Center to have a staff member serve in a classroom at the school, rather than on the Center's own campus. Fundraising efforts, which have recently been expanded, will target construction of an indoor swimming pool as part of a larger $5 million capital campaign. The majority of campaign proceeds will be spent on capital projects and are not expected to boost liquidity. The Center borrowed approximately $1.5 million under a pooled variable rate bond offering in December of 2002 to finance the purchase of a property near its primary location. The property consisted of several residences now being utilized to house staff. The bonds are supported by a letter of credit agreement that expires in December, 2007. Although the letter of credit and variable interest rates add an element of risk to the Center's debt structure, Moody's believes the relatively small size of the borrowing makes these risks manageable at the current rating level.

Outlook

New England Center for Children's rating outlook remains stable reflecting our expectation for steady demand for its services, maintenance of break-even or positive operating results and no additional borrowing plans.

Total Revenue: $33.0 million Days cash on hand: 25.3 days Debt to Cash flow: 9.7 times Total Debt Outstanding: $19.8 million Operating Cash flow Margin: 6.5% Maximum annual debt service coverage: 1.60x

NEW WORLD: Has Until July 5 to Make Lease-Related Decisions-----------------------------------------------------------The U.S. Bankruptcy Court for the Middle District of Pennsylvania gave New World Pasta Company and its debtor-affiliates an extension until July 5, 2005, to decide whether to assume, assume and assign, or reject two unexpired leases of nonresidential real property pursuant to Section 365(d)(4) of the Bankruptcy Code.

The Debtors submit that they are actively engaged in developing and refining their business plan and are not in the position to make an informed decision regarding these leases. The leased premises include critical components of the Debtors' ongoing business operations, which are principal assets of the estates. Premature assumption or rejection might disrupt the Debtors' business and impair the value of their estates.

Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is a pasta manufacturer in the United States. The Company, along with its debtor-affiliates, filed for chapter 11 protection (Bankr. M.D. Penn. Case No. 04-02817) on May 10, 2004. Eric L. Brossman, Esq., and Robert Bein, Esq., at Saul Ewing LLP, in Harrisburg, serve as the Debtors' local counsel. Bonnie Steingart, Esq., and Vivek Melwani, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, represent the Creditors' Committee. In its latest Form 10-Q for the period ended June 29, 2002, New World Pasta reported $445,579,000 in total assets and $451,816,000 in total liabilities.

NOVOSTE CORP: Considering Liquidation as One of Many Options------------------------------------------------------------Novoste Corporation (NASDAQ: NOVT) has been actively seeking new product opportunities, as well as a merger, business combination or other disposition of its business or assets, due to the continuing challenges facing its vascular brachytherapy products business, which have resulted in a sustained decline in its revenues.

As previously announced, the Company retained an investment banking and strategic advisor, Asante Partners LLC, in April 2004, to assist the Company in its efforts to identify and implement strategic and financial alternatives. Based on the outcome of this process, the Company expects to determine in the near term how best to proceed.

As part of its review of potential strategic alternatives, the Company has received inquiries from, and has engaged in discussions with, companies potentially interested in a merger or business combination with the Company. Based on these inquiries and discussions, the Company cannot assure its stockholders that any such transaction will be successfully concluded. Further, even if such a transaction is successfully concluded, the value of consideration that would be received by, or the transaction value to, its stockholders in such a merger or business combination may be less than the prices at which our common stock has recently traded.

If a suitable transaction resolving the Company's future on acceptable terms does not become available in the relatively near term, the Company will need to consider other alternatives, which could include the shutdown of our operations and dissolution and liquidation. If the Company were to liquidate, the Company cannot predict when it would be able to make a distribution to its stockholders. However, the amount paid in liquidation would be significantly lower than the prices at which the Company's common stock has recently traded. Any distributions in liquidation would be reduced by cash expenditures and by additional liabilities we may incur, and by the ultimate amounts paid in settlement of our liabilities.

Discloses NOL Impairment Determination

Also, the Company had previously reported in the audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2003, that it had approximately $108 million of net operating loss carryforwards which were fully reserved and will expire beginning 2007 through 2023. Section 382 of the Internal Revenue Code imposes an annual limitation on the utilization of NOL carryforwards based on a statutory rate of return and the value of the corporation at the time of a change in ownership as defined by Section 382 of the IRC. As a result the Company evaluates whether there are limitations on the use of its NOL carryforwards, including the impact of cumulative changes in the ownership of the Company's common stock. This evaluation includes reliance upon the filings on Schedules 13D and 13G by certain stockholders in accordance with Securities and Exchange Commission rules as well as additional reviews by the Company.

In connection with its review of a potential strategic alternative, the Company recently completed a review of whether there are limitations on the use of its NOL carryforwards. During the foregoing review, the Company became aware of what it believes are potential inaccuracies contained in certain Schedules 13D and 13G filings made by certain persons with the SEC during the past several years and has determined that certain purchases and sales of its common stock were not reported accurately. As a result, the Company has determined that a change in ownership, as defined in Section 382 of the IRC, took place on September 17, 2003, which imposes annual limitations restricting the timing and amounts of the future use of available NOL carryforwards. As a consequence of these limitations, approximately two-thirds of the NOL carryforwards will expire unused.

As of September 17, 2003 the future use of NOL carryforwards is limited to $1.8 million annually, and approximately $36 million in total. All of the NOL carryforwards are fully reserved and will expire over a 17-year period beginning in 2007. The change in ownership had no impact on reported net income or loss per share for the year ended December 31, 2003 or the nine months ended September 30, 2004.

The utilization of these NOL carryforwards could be further restricted in future periods as a result of any future change in ownership, as defined in Section 382 of the IRC. Such future change in ownership, if any, may result in significant additional amounts of these NOL carryforwards expiring unused.

About Novoste Corporation

Novoste Corporation, based in Atlanta Georgia, develops advanced medical treatments for coronary and vascular diseases and is the worldwide leader in vascular brachytherapy. The Company's Beta-Cath(TM) System is commercially available in the United States, as well as in the European Union and several other countries. Novoste Corporation shares are traded on the NASDAQ National Stock Market under the symbol NOVT. For general company information, call (770) 717-0904 or visit the Company's website at http://www.novoste.com/

According to Moody's, the underlying collateral pool has experienced credit deterioration such that the outstanding ratings on the above class of Notes are no longer representative of the risks presented to the holders of such Notes. The issuer, as of December 3, 2004 monthly surveillance report, is violating all of its interest coverage tests and Weighted Average Rating Factor Test.

(a) the ability of Reorganized Farmland to maintain the defined benefit pension plans for which it will be responsible; and

(b) the proposed exculpation, discharge and release provisions of the Debtors as envisioned in the Plan of Reorganization.

The Disclosure Statement suggests that Reorganized Farmland will maintain the Pension Plans. However, the U.S. Debtors have disclosed that Reorganized Farmland will have substantial secured indebtedness. If the Pension Plans are terminated, the PBGC notes that its claims would mature and become immediately due and owing. This would result in a substantial dilution of the expected recovery from the Debtors' estates, particularly the estate of Milk Products of Alabama.

The PBGC asserts claims for unfunded benefit liabilities against the U.S. Debtors in the estimated cumulative amount of $33,142,300. The PBGC filed liquidated and unliquidated claims for minimum funding contributions due the Pension Plans in the estimated cumulative amount of $3,934,667. The PBGC also filed unliquidated claims for premiums that may be due the PBGC with respect to the Pension Plans. The claims were filed assuming that the termination date of the Pension Plans was April 16, 2004.

The PBGC complains that Reorganized Farmland's ability to maintain and fund the Pension Plans is not adequately discussed. Lacking this necessary information, the PBGC cannot gauge whether Reorganized Farmland will have the wherewithal to support its financial obligations related to the Pension Plans.

The PBGC projects the minimum funding requirements of the Pension Plans over the next several years as:

2005: $1,989,000 2006: $1,847,000 2007: $1,087,000 2008: $360,000

The income statements provided in the Disclosure Statements do not reflect any Pension Plan expense for the next several years. The U.S. Debtors also failed to disclose how Reorganized Farmland will be able to fund the Pension Plans once the Plan of Reorganization becomes effective. For the PBGC to properly evaluate whether Reorganized Farmland can fund and maintain the Pension Plans, the PBGC will require income tax returns, as well as financial statements and operating results for all United States affiliates.

The PBGC further contends that the Disclosure Statement fails to adequately explain why it is appropriate and necessary for the Reorganization Plan to contain expansive release and discharge provisions that could be read to preclude potential Pension Plans-related claims of creditors against the Debtors and other non-debtor third parties. The release and discharge provisions do not specifically state which Pension Plan-related claims would be released, and do not discuss whether the proposed releases apply to potential present and future claims of the PBGC or the Pension Plans' participants.

PAXSON COMMS: Appraiser Values 60 TV Stations at $2.65 Billion-------------------------------------------------------------- Paxson Communications Corporation (AMEX:PAX) has received the appraisal of the value of its 60 full power television stations in compliance with the terms of its $365 million Senior Secured Floating Rate Notes due 2010. The appraiser concluded that, as of December 1, 2004, the estimated fair market value of the 60 television stations owned or operated by the Company was $2.65 billion as start-up entities, based entirely on the broadcasting stick value of these stations, without consideration of the digital spectrum or analog band clearing value associated with these stations, if any. Additionally, the scope of the appraisal did not consider any values attributable to other assets of the Company, including its program library or the 32.4 million television households which receive the PAX TV network signal through cable and satellite distribution and which are not served by the Company's broadcast television stations.

The Company has had appraisals of its broadcast television stations prepared by independent valuation firms from time to time, and is required under the terms of the Senior Notes to obtain an annual appraisal of the value of its stations. Each appraisal was prepared in accordance with certain procedures and methodologies set forth therein. In general, appraisals represent the analysis and opinions of each of the appraisers as of their respective dates, subject to the assumptions and limitations set forth in the appraisal. An appraisal may not be indicative of the present or future values of the Company's assets upon liquidation or resale. The estimates and assumptions contained in the appraisals are subject to significant business, economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the Company's control or the ability of the appraisers to accurately assess and estimate, and are based upon assumptions with respect to future business decisions and conditions which are subject to change. The opinions of value set forth in any appraisal and the actual values of the assets being appraised will vary, and those variations may be material. The Company provides no assurance that it would actually be able to realize, in any sale, liquidation, merger or other transaction involving the Company's assets, the estimated values of such assets set forth in any appraisal. Prospective investors in the Company's securities should not place undue reliance on the appraisals.

About the Company

Paxson Communications Corporation -- http://www.pax.tv/-- owns and operates the nation's largest broadcast television distribution system and the PAX TV network. PAX TV reaches 87% of U.S. television households via nationwide broadcast television, cable and satellite distribution systems. PAX TV's original programming slate for the 2004-2005 broadcast season features the critically acclaimed unscripted series, "Cold Turkey"; a new scripted drama, "Young Blades"; two entertaining variety programs, "America's Most Talented Kids" and "World Cup Comedy," executive produced by Kelsey Grammer; and two fast-paced game shows, "On the Cover" and "Balderdash." Returning series include PAX's top-rated dramas, "Doc" and "Sue Thomas: F.B.Eye."

The SGL-3 rating reflects Paxson's adequate liquidity profile asprojected over the next twelve months. The downward revision tothe SGL rating incorporates our expectation that Paxson may beunable to cover fixed charges and capital expenditure requirementswith operating cash flow over the time horizon of the liquidityrating. Thus, going forward, Paxson may not remain free cash flowneutral and it is our belief that while Paxson's moderate cashbalances (about $80 million as of 3Q'04) provide sufficient nearterm liquidity to comfortably service all of the company'sobligations, Paxson is likely to burn slowly through this cushion.Also influencing the rating, Moody notes that cash flow andexisting cash balances provide only minimal coverage relative tothe Paxson's total debt burden (about 3% of total debt includingpreferreds).

The SGL-3 rating also considers the continuing challenges Paxsonfaces regarding its operating strategy, and the potential for astill weaker operating environment in 2005 as the companyrepositions the PAX TV network.

As reported in the Troubled Company Reporter on June 12, 2003,Moody's Investors Service's ratings on Paxson Communications Corp.took a downward slide after the investors service's review.Outlook is revised to stable from negative.

Downgraded Ratings:

* approximately $355 million of bank facilities to B1 from Ba3,

* approximately $556 million of senior subordinated notes to Caa1 from B3,

* approximately $366 million of cumulative exchangeable junior preferred stock to Caa2 from Caa1,

Company sales totaled $284.2 million, a 5.8 percent decrease from $301.8 million during fiscal December of last year.

Total sales for the first eleven months of fiscal 2004 were $2.63 billion, compared with $2.65 billion during the similar period in fiscal 2003. Same- store sales decreased 0.8 percent during the first eleven months of the fiscal year.

In August the company announced a series of strategic initiatives as part of a plan designed to sharpen the company's focus on its core business strategy, reduce expenses, accelerate decision-making, increase profitability, improve operating margin, and build value for shareowners over the long-term. The initiatives include:

-- exiting Parade, Peru and Chile;

-- the closing of approximately 260 additional Payless ShoeSource stores;

-- the reduction of wholesale businesses that provide no significant growth opportunity; and

-- a reduction of the company's expense structure.

The company estimates that the total costs relating to the strategic initiatives could be in the range of $70 million to $80 million, a reduction from previously disclosed estimates due to lower than expected costs for store closings.

The company expects to complete all of the strategic initiatives by the end of fiscal 2004, and to end the year with its inventory assortment appropriately positioned for Spring 2005.

The company also recently announced that it is reviewing its agency account relationship for North American advertising.

Payless ShoeSource, Inc. -- http://www.payless.com/-- is the largest specialty family footwear retailer in the Western Hemisphere. As of the end of December 2004, the Company operated a total of 4,709 stores offering quality family footwear and accessories at affordable prices.

* * *

As reported in the Troubled Company Reporter on Sept. 6, 2004, Standard & Poor's Ratings Services lowered its ratings on Topeka, Kansas-based specialty footwear retailer Payless ShoeSource Inc. The corporate credit rating was lowered to 'BB-' from 'BB'. All ratings were removed from CreditWatch, where they were placed with negative implications on March 2, 2004. The outlook is negative.

RES-CARE INC: S&P Raises Senior Unsecured Debt Rating to 'B'------------------------------------------------------------Standard & Poor's Ratings Services raised its ratings on Louisville, Kentucky-based special-needs services provider Res-Care Inc. The corporate credit rating was raised to 'B+' from 'B', the senior secured debt rating to 'BB-' from 'B+', and the senior unsecured debt rating to 'B' from 'B-'. At the same time, Standard & Poor's revised its outlook on the company to stable from positive.

"The upgrade reflects Res-Care's improved liquidity following an equity infusion from its financial sponsor, as well as the company's improved operating performance, its execution of a controlled acquisition strategy, and the anticipated improvements in its financial profile as a result of acquisitions and new contracts," said Standard & Poor's credit analyst Jesse Juliano.

Standard & Poor's expects Res-Care to continue to use the proceeds from a $47 million equity infusion from financial sponsor Onex Partners L.P. to acquire a number of relatively small special-needs service providers. In addition, the company just signed a three-year, $90 million New York City human resources administration contract. Res-Care's credit profile should continue to improve as it generates greater EBITDA and free cash flow from acquisitions and new contracts. Res-Care has a history of successfully completing small tuck-in acquisitions, and Standard & Poor's does not anticipate significant integration issues.

The low-speculative-grade ratings on Res-Care Inc. reflect the rate pressures it faces from government and related payors dealing with overburdened budgets. These pressures are exacerbated by the company's thin EBITDA margins. Res-Care also faces rising insurance expenses and relatively high debt levels. (The company had $187 million of debt outstanding as of Sept. 30, 2004). These credit factors are somewhat offset by Res-Care's successful expansion of its core operations, as well as its top standing in a unique market (providing support services to individuals with special needs) and its improved financial flexibility following the Onex equity infusion.

Res-Care provides residential services, training, education, and support services to populations with special needs throughout the U.S., Puerto Rico, and Canada, including people with developmental or other disabilities, as well as at-risk and troubled youths. The company's market has grown rapidly, as state agencies have stopped providing services to at-risk populations. The eligible client base is large and underpenetrated, and only about 10% of qualified candidates receive service.

The affirmations, reflecting approximately $375 million, are due to credit enhancement consistent with future loss expectations. The upgrade rating actions, reflecting approximately $6.7 million, are being taken as a result of low delinquencies and losses, as well as increased credit support levels. As of the Dec. 25, 2004, distribution date, RAMP 2003-RM1 group III suffered neither losses nor delinquencies and is supported by continuously increasing credit enhancement.

Above deals have pool factors (i.e. current mortgage loans outstanding as a percentage of the initial pool) ranging from 42% to 62%, consisting of 15- to 30-year fixed-rate mortgage loans, secured by first liens on one- to four-family residential properties.

RYLAND GROUP: Sells $250 Million of 5-3/8% Senior Notes Due 2015----------------------------------------------------------------The Ryland Group, Inc. (NYSE: RYL), sold $250 million of 5-3/8% senior notes due 2015 pursuant to a shelf registration statement on file with the U.S. Securities and Exchange Commission. The offering was led by UBS Securities LLC and Banc of America Securities LLC as joint book-runners, and J.P. Morgan Securities Inc. and Wachovia Capital Markets, LLC as co-managers.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the senior notes. This press release is being issued pursuant to and in accordance with Rule 135 under the Securities Act of 1933, as amended.

With headquarters in Southern California, Ryland -- http://www.ryland.com/-- is one of the nation's largest homebuilders and a leading mortgage-finance company. The Company currently operates in 27 markets across the country and has built more than 225,000 homes and financed over 195,000 mortgages since its founding in 1967. Ryland is a Fortune 500 company listed on the New York Stock Exchange under the symbol "RYL."

* * *

As reported in the Troubled Company Reporter on Dec. 29, 2004, Moody's Investors Service raised the ratings on three issues of senior notes of The Ryland Group, Inc., to Baa3 from Ba1 and confirmed the company's other ratings. The ratings outlook remains stable.

The upgrades reflect Ryland's decision to attach the guarantees of its major homebuilding subsidiaries to the senior note issues. Previously, the senior notes did not carry upstream subsidiary guarantees and thus were rated one notch below the senior implied rating.

These rating actions were taken:

* Senior implied rating is confirmed at Baa3

* Senior unsecured issuer rating is raised to Baa3, from Ba1

* $100 million of 8% senior notes due 8/15/2006 is raised to Baa3, from Ba1

* $150 million of 5.375% senior notes due 6/1/2008 is raised to Baa3, from Ba1

* $147 million of 9.75% senior notes due 9/01/2010 is raised to Baa3, from Ba1

* $143.5 million of 9.125% senior subordinated notes due 6/15/2011 is confirmed at Ba2

The rating on the senior subordinated notes was left unchanged because the subsidiary guarantees will not apply to this issue.

Ryland's ratings reflect the continuing improvement in its financial profile, a highly disciplined growth strategy that avoids acquisitions, a conservative land policy, tight cost controls, and strong liquidity. At the same time, the ratings consider Ryland's size relative to its peer group, the ongoing share repurchase program, and the cyclical nature of the homebuilding industry.

SAN JOAQUIN: Moody's Affirms Ba2 Rating for TCA Revenue Bonds-------------------------------------------------------------Moody's Investors Service has confirmed the underlying Ba2 rating for the revenue bonds of the San Joaquin Hills Transportation Corridor Agency (SJHTCA). The rating outlook is negative.

This concludes our Watchlist review of the Agency initiated in February 2004 in light of the failure of a planned consolidation with the F/ETCA and the lack of board consensus on mitigation alternatives to avert a potential default. The rating applies to $1.9 billion of outstanding Series 1997 and 1993 revenue bonds revenue bonds issued by the Agency to construct a 15-mile limited access toll road in Orange County. The rating and outlook are based on weak traffic and revenue performance as compared to forecast and the possibility of a cash default as early as 2014 absent dramatic growth in traffic and revenues or external financial support. The availability of some accumulated reserves and external liquidity in the form of a Federal line of credit (FLOC) as well as the economic strength of the service area somewhat mitigate credit risks in the near term. Some of the bonds are insured by MBIA and rated Aaa based on the financial strength of the bond insurer.

Recent Developments/Results:

Toll revenues for FY 2004 and FY 2003 were 78% and 77% of forecast respectively. While year-to-date FY 2005 traffic growth appears to be accelerating, notwithstanding the impact of a recent toll rate increase, Moody's believes it unlikely that revenue will grow fast enough to match a steep increase in debt service requirements in FY 2006, and certainly not after the FLOC expiration in 2007. The SJH pledged revenue has only met the 1.3x rate covenant over the last several years by virtue of the use of one-time, non-toll revenues to defease some bonds. Based on the current pace of traffic and revenue growth, Moody's expects that the bonds will fail to meet the rate covenant by FY 2006 or 2007. A cash default could occur by FY 2014 or 2015, after the Agency exhausts all available reserves.

The Agency has not met its traffic and revenue forecast and is dependent on accelerated toll rate increases starting in 2009 to boost revenues and meet steadily increasing debt service requirements over the near to medium term. Further, there is a protracted lack of clear political consensus on the boards of both SJHTCA and its sister agency Foothill/Eastern Transportation Corridor Agency (F/ETCA rated Baa3, stable outlook) on a mitigation plan to avert a the potential default.

The governing boards of both F/ETCA and SJHTCA are currently evaluating a mitigation proposal to avert the potential payment default by SJHTCA. Though the proposal has not yet been formalized, at the time it was drafted it called for a one-time payment of $120 million as well as a $1 billion loan from the excess revenues of F/ETCA to SJHTCA. The $120 million payment would serve as a litigation settlement to compensate SJHTCA for the projected toll revenue loss related to the planned Foothill-South project (currently undergoing environmental review) and is projected to help the agency meet its covenanted DSCR of 1.3x through 2010. The loan would subsidize debt service payments and coverage after 2010. In order to be implemented the proposal would require the approval of bondholders and both agency boards, as well as possible amendments to the F/ETCA bond indenture. Moody's will continue to monitor the progress of the proposed mitigation plan and its potential credit impact on both the F/ETCA and the SJHTCA.

As of October, 2004, the agency held $4.2 million in unrestricted cash reserves and nearly $182 million in funds restricted under the bond indenture, including a debt service reserve fund balance of approximately $96 million, a capitalized interest account balance of $19 million and a $15 million use and occupancy fund that may be used for debt service if needed.

Credit strengths are:

-- Recently accelerated growth in revenue due to increased tolls and continued stable traffic

-- Limited ramp-up risk

-- No construction risk

-- Autonomy to raise tolls

-- Above average income service area

-- Management continuity with nearly 15 years of history with essentially the same team

-- Availability of $12 million annual FLOC through 2007

-- Some liquidity, with approximately $96 million in debt service reserves, $19 million in capitalized interest account and $4.2 million in general reserves

Credit challenges are:

-- Toll revenues, while growing, remain more than 20% below forecast

-- Rate covenant of 1.3x has been met only by use of one-time, non-toll revenues to defease some bonds

-- At current traffic growth rates, Agency may be in technical default by FY 2006 or FY 2007 and cash default by FY 2014 or 2015

-- The FLOC expires at the end of 2007

-- Revenue growth depends on regular toll rate increases, as well as continued development along corridor

-- Proposed mitigation plan to avert technical and cash default requires approval of boards of both agencies as well as consensus on Foothill-South expansion project

-- Protracted lack of political of consensus on mitigation plan makes potential default more likely

The San Joaquin Hills Transportation Corridor consists of a single 15- miles of high speed, electronically tolled four to six lane road in Southern Orange County. The road opened to traffic in 1996. In 1997 the Agency restructured its debt and extended payment of principal maturities by three years to improve the DSRC due to slower than projected traffic and revenue ramp-up. The agency is a joint exercise of powers agency organized under state law and governed by an independent board comprised of local government representatives. Additional structural enhancements include required cash reserves and the FLOC.

What Could Change the Rating - UP

The Agency's credit could benefit from implementation of a mitigation or restructuring plan to bolster revenues and avert both technical and cash defaults.

The rating outlook is negative based on traffic and revenue growth that remains slower than needed to pay for escalating debt service and the lack of a mitigation plan to provide financial support after FLOC expires.

SCHLOTZSKY'S INC: Bobby Cox Closes Purchase of All Assets---------------------------------------------------------Bobby Cox Companies, Inc., has closed on its purchase of substantially all of the assets of Schlotzsky's, Inc. Bobby Cox Companies will:

-- operate the Schlotzsky's franchise system as a privately owned company;

-- keep its headquarters in Austin; and

-- retain all current Schlotzsky's employees.

The sale was approved on Dec. 8, 2004, by Judge Leif Clark of the United States Bankruptcy Court for the Western District of Texas, San Antonio Division after the Company filed for Chapter 11 protection and subsequently auctioned off its assets to the Bobby Cox Companies.

The new management group will include Bobby D. Cox as Chairman, Bob Barnes as President and Ronny Jordan as Chief Financial Officer. Darrell Kolinek will remain as Vice President of Operations. This group brings more than 90 years experience in the restaurant industry, as both a franchisor and a franchisee, providing a unique and valuable perspective on how to position the Company and its franchisees for success. Initial steps toward that goal will be to focus on cost efficiencies and more effective and localized marketing.

"We have long admired the passion customers have for Schlotzsky's and its Original sandwich, and we are excited to take the Company to a new level of respect and success. Based on the feedback I have received from employees, franchisees and suppliers, that excitement is spreading like wildfire throughout our community. Everyone is enthusiastic about the tremendous opportunities ahead," said Bob Barnes. "By remaining in Austin, we intend to continue to be a part of the community that helped build our brand and to retain all of the Schlotzsky's home office staff, thereby preserving continuity for our franchisees. In addition, we have created an unparalleled management team to spearhead what we think will be one of the most inspiring turnaround stories in the restaurant industry."

"From the day the sale was approved by the bankruptcy court, the management team from Bobby Cox Companies has been visible in the franchise system, taking the time to listen to our concerns and truly understand the steps necessary to return Schlotzsky's to the position it deserves in the restaurant industry," said Jan Carmean, a Schlotzsky's franchisee in Athens, Georgia. "I believe this management group is equipped to help us become a stronger and more viable system, and I'm excited to be a part of the Schlotzsky's concept."

Bobby Cox Companies, Inc., is a dynamic family of service businesses dedicated to meeting the needs of today's consumers. Under the guidance of its founder, Bobby D. Cox, the company has grown from its humble beginnings as a single coffee shop restaurant in 1961 in Odessa to a multi-concept organization operating more than 30 businesses throughout the southwestern United States. From entertainment, restaurants, and telecommunications to oil and gas production, custom food manufacturing, ranching and real estate development, the Bobby Cox Companies is the embodiment of the entrepreneurial spirit of free enterprise. The company is headquartered in the International Plaza Building in Ft. Worth, Texas, and employs more than 2,200 people throughout Texas, Oklahoma, Missouri, Arkansas and New Mexico. As of Jan. 7, 2005 there were 445 Schlotzsky's restaurants open and operating in 36 states, the District of Columbia and six foreign countries.

Headquartered in Austin, Texas, Schlotzsky's, Inc. --http://www.schlotzskys.com/-- is a franchisor and operator of restaurants. The Debtors filed for chapter 11 protection on August 3, 2004 (Bankr. W.D. Tex. Case No. 04-54504). Amy MichelleWalters, Esq., and Eric Terry, Esq., at Haynes & Boone, LLP, represent the Debtors in their restructuring efforts. When theDebtors filed for protection from their creditors, they listed$111,692,000 in total assets and $71,312,000 in total debts.

SCHUFF INT'L: Extends 10-1/2% Consent Solicitation Until Friday--------------------------------------------------------------- Schuff International Inc. (Pink Sheets:SHFK), a family of companies providing fully integrated steel construction services, has increased the consent fee and further extended the consent solicitation in connection with a certain proposed amendment to the Indenture pursuant to which its 10-1/2% Senior Notes due 2008 were issued. Schuff has increased the consent fee, payable to all holders of record whose consent is received before expiration or earlier termination of the consent solicitation, from $0.50 per $100 principal amount of Notes owned by the consenting holder as of the record date to $0.75 per $100. Schuff also has further extended the expiration date until 5 p.m., New York City time, on Friday, Jan. 14, 2005, unless the consent solicitation is further extended or earlier terminated if the requisite consent is obtained before the expiration date.

The adoption of the proposed amendment is conditioned on delivery of consents from holders of at least a majority of the principal amount of the Notes. The adoption of the proposed amendment is also subject to certain other conditions, which are described in Schuff's Consent Solicitation Statement dated Dec. 8, 2004, as supplemented to reflect the increased consent fee and the extended expiration date. The consent solicitation is being made solely by means of the Consent Solicitation Statement. Except as otherwise described above, all terms and conditions of the consent solicitation are unchanged. This announcement is not an offer to purchase, a solicitation of an offer to purchase, or a solicitation of consent with respect to any securities.

Guggenheim Capital Markets LLC is serving as Solicitation Agent in connection with the consent solicitation. Questions regarding the terms of the consent solicitation may be directed to the Solicitation Agent at 212-381-7500, Attention: Joe Bencivenga. Global Bondholder Services Corp. is serving as Tabulation Agent and Information Agent in connection with the consent solicitation. Questions regarding the delivery procedures for the consents and requests for additional copies of the Consent Solicitation Statement or related documents may be directed to the Information Agent at 212-430-3774.

About the Company

Schuff International Inc. is a family of steel fabrication and erection companies providing a fully integrated range of steel construction services, including design engineering, detailing, joist manufacturing, fabrication and erection, and project management expertise. The company has multi-state operations primarily focused in the U.S. Sunbelt.

* * *

As reported in the Troubled Company Reporter on June 21, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Schuff International, Inc., to 'CCC' from 'B-'. The outlook was negative.

SHAW GROUP: Reports First Quarter 2005 Financial Results-------------------------------------------------------- The Shaw Group Inc. (NYSE: SGR) reported financial results for its first quarter fiscal 2005 ended November 30, 2004. Net income from continuing operations for the first quarter of fiscal 2005 was $10.8 million. The Company also reported a loss from discontinued operations of $0.8 million for the period. In comparison, for the three months ended November 30, 2003, the Company reported a net loss from continuing operations of $49.6 million, and discontinued operations of $0.1 million. For the first quarter of fiscal 2005, revenues were $828.1 million compared to $646.9 million in the prior year's first quarter.

Shaw's backlog totaled $5.4 billion at November 30, 2004, with approximately $2.4 billion, or 44%, of the backlog is expected to be converted during the next 12 months. Approximately $2.6 billion, or 49%, of the backlog is in the environmental and infrastructure sector, primarily contracts with Federal government agencies and commercial entities; approximately $2.0 billion, or 38%, of the backlog is comprised of projects for fossil-fuel, nuclear and other power generating plants; and approximately $0.7 billion, or 13%, is projects for process industry facilities.

J.M Bernhard, Jr., Chairman and Chief Executive Officer of The Shaw Group Inc., said, "We are pleased with our first quarter net income from continuing operations of $0.17 per diluted share and positive net cash from operations of $10.0 million. This quarter marks a sharp improvement from our last year's first quarter results, both in revenues and net income and continues the positive trend we started three quarters ago. We are especially excited by the improving markets we see in the energy and process industries including the increase in our maintenance work. Our environmental and infrastructure segment has remained strong and pursued market opportunities aggressively, especially in rapid response services."

Mr. Bernhard added, "We are well positioned to continue to expand and diversify our business. We have recently replaced our Engineering, Construction and Maintenance Division with two new divisional segments: the Energy and Chemicals Division and a separate Maintenance Division. We believe these organizational refinements will not only improve our overall operational capabilities, but also will enhance our company-wide sales and marketing efforts."

About the Company

The Shaw Group Inc. -- http://www.shawgrp.com/-- is a global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities management services for government and private sector clients in the power, process, environmental, infrastructure and emergency response markets. A Fortune 500 Company, The Shaw Group is headquartered in Baton Rouge, Louisiana, and employs approximately 18,000 people at its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region.

* * *

As reported in the Troubled Company Reporter on Dec. 08, 2004, Standard & Poor's Ratings Services lowered its corporate creditrating on The Shaw Group to 'BB-' from 'BB.' Other ratings werealso lowered one notch. The outlook is negative. AtAug. 31, 2004, the Baton Rouge, Louisiana-based engineering andconstruction services provider had about $476 million total debtoutstanding (including present value of operating leases).

SIX FLAGS: Prices $195 Million of New 9-5/8% Senior Notes Due 2014------------------------------------------------------------------ Six Flags, Inc. (NYSE: PKS) has priced $195 million aggregate principal amount of its 9-5/8% senior notes due 2014, pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The notes are being issued as additional debt securities under an indenture pursuant to which, on December 5, 2003, the Company previously issued and sold $325 million aggregate principal amount of its 9-5/8% senior notes due 2014.

As previously announced, all of the net proceeds of the offering will be used to redeem all of the Company's outstanding 9 1/2% senior notes due 2009 that have not been previously called for redemption.

The 9-5/8% senior notes due 2014 have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States, absent registration or an applicable exemption from such registration requirements.

This announcement is not an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of the securities in any state where such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

The information contained in this news release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although Six Flags believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.

As reported in the Troubled Company Reporter on Jan. 10, 2005, Standard & Poor's Ratings Services assigned its 'CCC' rating toSix Flags Inc.'s privately placed, Rule 144A $195 million add-onto its 9.625% senior notes due 2014. Proceeds from the offeringwill be used to redeem the company's 9.5% senior notes due 2009.At the same time, Standard & Poor's affirmed its ratings for thecompany, including the 'B-' corporate credit rating. The ratingoutlook is stable. The Oklahoma City, Oklahoma-based operator of30 regional theme parks had total debt and preferred stock of$2.4 billion as of Sept. 30, 2004.

SOLUTIA INC: Wants Bankr. Court to Approve Claim Waiver Procedures------------------------------------------------------------------Solutia, Inc. and its debtor-affiliates have undergone an extensive review of their executory contracts to identify those that are not profitable for them. As a result of the review, the Debtors found that they could achieve cost savings by terminating certain contracts, allowing other contracts to expire by their terms, consolidating service providers in certain areas, requesting new bids for certain services and otherwise renegotiating certain terms and conditions of their contracts.

The Debtors acknowledge that there are legitimate prepetition amounts owing to a significant number of vendors and service providers with whom they do business. The Debtors believe that the prudent course in connection with these vendors and providers is to strive to minimize the prepetition claims asserted against their estates at the same time that the Debtors seek to improve the terms and conditions of vendor and supplier contracts.Therefore, as they negotiate new or revised procurement-related contractual relationships with their vendors and providers, theDebtors from time to time seek waivers of a vendor's or a service provider's prepetition claim as an incentive for the Debtors to continue to do business with them. In that regard, the Debtors have already successfully obtained waivers of certain prepetition claims in connection with amending, extending or entering into new contracts with their vendors and suppliers. The Debtors anticipate seeking and achieving similar results in the future.

While the Debtors believe that Court approval is not generally required for waivers of prepetition claims, the Debtors recognize that the award of a future contract in connection with a claim waiver may be construed as a compromise or settlement of a claim within the meaning of Rule 9019 of the Federal Rules ofBankruptcy Procedure.

Requiring Court approval of each miscellaneous waiver of a claim would be administratively burdensome to the Court and costly for the Debtors' estates, especially in light of the small size of the claims involved in the transactions compared to the overall magnitude of claims against the Debtors' estates. In certain cases, the costs and delays associated with seeking individual Court approval of a claim waiver potentially would eliminate, or substantially undermine, the economic benefits of the transaction.

To reduce the burdens and costs, the Debtors ask the United States Bankruptcy Court for the Southern District of New York to approve a modified process for review and approval of small claim waivers falling within certain specified economic parameters.Under the proposed process, the Debtors will use the Claim Waiver Procedures to obtain more expeditious and cost-effective review by interested parties, in lieu of individual court approval, of certain waivers of small dollar amount claims. All other settlements would remain subject to Court approval on an individual basis pursuant to Section 363 of the Bankruptcy Code and Bankruptcy Rule 9019.

Claim Waiver Procedures

The salient terms of the Debtors' proposed Claim WaiverProcedures are:

A. Transactions for which the Claim Waiver Procedures may be used

The Claim Waiver Procedures would apply to a waiver of all or a portion of a prepetition claim where the size of the waiver amounts to, in each case, $500,000 or less.

B. Notice and opportunity to object for Non-De Minimis Claim Waivers

For Claim Waivers between $100,000 and $500,000, the Debtors propose that after a Debtor enters into a contract or contracts contemplating a Claim Wavier, the Debtors will serve a notice of the Proposed Waiver by e-mail, facsimile or overnight delivery service on:

-- the United States Trustee for the Southern District of New York;

-- counsel to the Official Committee of Unsecured Creditors;

-- counsel to the Official Committee of Retirees;

-- counsel to the agents for the Debtors' postpetition secured lenders;

-- counsel to the indenture trustee for the secured public debt securities issued by the Debtors;

-- counsel to the ad hoc committee for the secured public debt securities issued by the Debtors;

-- counsel to the Official Committee of Equity Security Holders; and

-- the creditor agreeing to the Claim Waiver and its counsel, if known.

The Debtors propose that each Waiver Notice include these information with respect to the Proposed Waiver:

(a) a description of and the basis for the claim or claims that are the subject of the Proposed Waiver and the Debtor party against whom the claim or claims are being asserted;

(b) any known defenses to the claim that is the subject of the Proposed Waiver;

(c) the identity of the non-debtor party or parties to the Proposed Waiver and any relationships between the party or parties and the Debtors;

(d) the nature of any new contractual relationship that the Debtors will enter into as a result of the Proposed Waiver;

(e) the business justifications for the Proposed Waiver and an assurance that any negotiations with the non-debtor party or parties to the Proposed Waiver occurred on an arm's-length basis;

(f) instructions consistent with the procedures to assert objections to the Proposed Waiver; and

(g) the Debtors' basis for believing that the Proposed Waiver is in the best interests of the estates as well as the probability of success of litigation of the claim.

With respect to each Waiver Notice, Interested Parties have through 5:00 p.m., Eastern time, on the 10th calendar day after the date of service thereof to object to the Proposed Waiver. If no Objections are properly asserted before the expiration of the Notice Period, the applicable Debtor or Debtors would be authorized, without further notice and without further Court approval, to consummate the Proposed Waiver in accordance with the terms and conditions of the underlying contract or contracts. If each Interested Party consents in writing to the Proposed Waiver before the expiration of the applicable Notice Period, then the Debtors would be authorized to consummate the Proposed Waiver without waiting for the Notice Period to expire. Upon either the expiration of the Notice Period without the receipt of any Objections or the written consent of all Interested Parties, the Proposed Waiver would be deemed final and fully authorized by the Court.

If any significant economic terms of a Proposed Wavier are amended after transmittal of the Waiver Notice, but before the expiration of the Notice Period, the applicable Debtor would be required to send a revised Waiver Notice to all Interested Parties describing the Proposed Waiver, as amended. If a revised Waiver Notice is required, the Notice Period would be extended for an additional five calendar days.

C. Objection procedures

Objections to any proposed Claim Waiver must:

(a) be in writing;

(b) be served on the Interested Parties and counsel to the Debtors so as to be received by all such parties before expiration of the Notice Period; and

(c) state with specificity the grounds for objection.

If an Objection to a Proposed Waiver is properly and timely served, the Debtors and the objecting Interested Party would use good faith efforts to resolve the Objection. If the Debtors and any objecting Interested Party were unable to achieve a consensual resolution, the Debtors would not be permitted to proceed with the Proposed Waiver pursuant to these procedures, but would have the ability to seek Court approval of the Proposed Waiver upon expedited notice and an opportunity for a hearing, subject to the Court's availability.

Within 45 days after the end of each quarter, the Debtors will provide to the Interested Parties a report itemizing the assets sold and consideration received for each De Minimis Waiver completed during the quarter.

Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000)

SUPERIOR NATIONAL: Zurich Agrees to Pay Liquidator $110 Million---------------------------------------------------------------Zurich Financial Services Group announced yesterday that the Insurance Commissioner of the State of California, as liquidator of the Superior National Insurance Companies, and Centre Insurance Company, have settled longstanding differences between them regarding CIC's transactions with various Superior National entities. The settlement in the case of Insurance Commissioner v. Centre Insurance Company, et al., results in a comprehensive resolution of the disputes between the Liquidatorand CIC and its affiliated entities.

The case, originally filed on January 16, 2002, was principally a preferential transfer action that involved claims against the defendants of approximately USD 250 million. The settlement will result in substantial recoveries for the estates of Superior National and eliminate significant ongoing costs of the litigation. As part of the settlement, CIC will transfer assets to or for the benefit of the Liquidator having an aggregate estimated value of up to USD 110 million, comprised of USD 80 million in cash; USD 20 million to be paid from the proceeds of certain securities with such payments guaranteed by a surety bond;and up to an additional USD 10 million to be paid from the proceeds of certain securities, with USD 5 million of this last USD 10 million conditionally guaranteed by the same surety bond being used to guarantee the payment of the USD 20 million. CIC has advised the Liquidator that CIC has already reserved forthis settlement.

Under the settlement, the Liquidator is also permitted to release funds (USD 22 million) that are currently being held in reserve by the Liquidator pending resolution of certain CIC claims. In addition, at the election of the Liquidator, CIC and other defendants would also withdraw all of their claims against the estates of the Superior National insurers, or assign them to theLiquidator.

The settlement should streamline the issues with which the Liquidator must contend, lower costs of estate administration, and expedite the ultimate closure of these insolvent estates. The bulk of the recoveries will ultimately be channeled to the California Insurance Guarantee Association and used to pay workers' compensation claims against the insolvent entities.

The settlement benefits CIC and the Liquidator in that it resolves extensive and complex claims and regulatory issues relating to business transactions between CIC and the Superior National insurance companies now in liquidation without the need for further costly and protracted litigation. The settlement must beapproved by the Court that is presiding over the liquidation of the estates of the Superior National insurers.

Zurich Financial Services is an insurance-based financial services provider with a global network that focuses its activities on its key markets in North America and Europe. Founded in 1872, Zurich is headquartered in Zurich, Switzerland. Zurich has offices in more than 50 countries and employs about 62,000 people.

The Superior National Insurance Group, Inc., consists of five companies. Four of the companies -- California Compensation Insurance Co., Combined Benefits Insurance Co., Superior National Insurance Co., and Superior Pacific Casualty Co. Son March 3, 2000, California Department of Insurance seized the assets and operations of Superior's insurance subsidiaries. The California Department of Insurance appeared before the Los Angeles and Sacramento superior courts on March 6, 2000, seeking conservation orders for Superior National Insurance Group to allow the commissioner to use department staff to conduct the business of the conserved company as he sees appropriate. The California Courts entered conservation orders on March 7, 2000. Superior National Insurance Group, Inc., and non-insurer affiliates Business Insurance Group, Inc., SN Insurance Services, Inc., and SN Insurance Administrators, Inc., filed chapter 11 petitions on April 26, 2000. Prior to its bankruptcy and the conservation of its insurance company units, Superior National Insurance Group had been the ninth largest workers' compensation insurance group in the nation and the largest private sector underwriter of workers' compensation insurance in California.

TV AZTECA: Fitch Withdraws 'B+' Rating on $300 Mil. Senior Notes----------------------------------------------------------------The recent U.S. Securities and Exchange Commission filing of civil fraud charges against TV Azteca S.A. de C.V. and some of its officers will likely result in litigation and the continuation of legal risks for TV Azteca over the near future, according to Fitch Ratings.

Fitch has incorporated a measure of litigation risk into the ratings of TV Azteca since early 2004 after the SEC launched an investigation into several related party transactions between Mexican wireless provider Unefon, a subsidiary 46.5% owned and controlled by TV Azteca until its spin-off last year, and investment company Codisco, co-owned by Ricardo Salinas Pliego, chairman of TV Azteca, and Moises Saba, chairman of Unefon. Litigation risk also includes several pending shareholder lawsuits.

Independent of the SEC announcement and following the prepayment of all of TV Azteca's international debt securities on Dec. 23, 2004, Fitch has affirmed and withdrawn the 'B+' international scale foreign and local currency senior unsecured ratings of TV Azteca as well as the 'B+' rating of TV Azteca's $300 million 10.5% senior notes due 2007. The prepayment was funded with proceeds from a $125 million bank loan and a $175 million issuance of peso-denominated certificados bursatiles. Fitch rates the structured certificados bursatiles issuance 'AA' on the Mexican national rating scale and will continue to monitor this security.

TV Azteca is the second-largest broadcasting company in Mexico. The company operates two national television channels, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca is controlled by holding company Azteca Holdings, which is not rated by Fitch.

UAL CORPORATION: Flight Attendants Reach Tentative Agreement ------------------------------------------------------------The Association of Flight Attendants-CWA disclosed that union has reached a tentative agreement with United Airlines. United management had sought additional concessions as the airline continues to reorganize in bankruptcy. The agreement for contract changes is now subject to approval by the flight attendants' Master Executive Council and ratification by the union's membership.

"Under the onerous realities of the bankruptcy process, flight attendants are faced with difficult decisions about our future," said Greg Davidowitch, President of the AFA's United Master Executive Council. "We have fought management every step of the way to ensure that this agreement would not provide a penny more from flight attendants than is legally necessary. We sought to ensure that any contractual change would be shaped in a way that avoids destruction of our career."

This newest agreement for concessions does not include changes in the area of pensions, and AFA continues to forcefully oppose the elimination of the flight attendants' pension plan. Additional details of the agreement will not be announced until after the union's leadership meets to review and consider approval of the contractual changes.

"While a consensual agreement avoids the destructive potential for court rejection of the flight attendant contract, no one should minimize the decision our members face in considering additional sacrifices," Mr. Davidowitch stated.

The AFA United Master Executive Council will meet in Chicago for a special closed session today, January 11, 2005, to discuss the agreement.

UAL Issues Statement

Following the tentative agreements with its flight attendants, UAL said: "We are pleased to have reached a tentative agreement with the Association of Flight Attendants on the permanent labor cost savings we need to successfully complete our restructuring, while leaving pension issues to be resolved. Over the next 90 days, we will work with the AFA to attempt to resolve pension issues. This tentative agreement will now go the AFA's Master Executive Council for review and approval and then go out to the AFA members for a ratification vote. At this time, United is deferring to the AFA to explain the terms of this tentative agreement to its members. Because of the tentative agreements with the AFA and AMFA -- Aircraft Mechanics Fraternal Association -- we will not be moving forward with an 1113(c) trial at this time."

More than 46,000 flight attendants, including 21,000 at United, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. Visit us at http://www.unitedafa.org/

Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts.

UAL CORP: Judge Wedoff Won't Approve Letter Agreement with ALPA---------------------------------------------------------------As reported in the Troubled Company Reporter on Jan. 04, 2005, UAL Corporation and its debtor-affiliates ask the Court for authorization to enter into a letter agreement with the pilots represented by the Air Line Pilots Association.

Under the Letter Agreement, pilot base pay will be reduced by 14.7%, effective January 1, 2005. Pilot wage rates will not increase until 2006 as per the previous pilot contract. Hourly pay will be increased by:

1.5% on May 1, 2006; 1.5% on May 1, 2007; 1.0% on January 1, 2008; 1.5% on May 1, 2008; and 1.5% on May 1, 2009.

The Debtors will no longer provide the pilots with incentive pay for late night and international flights. Retiree life insurance will be eliminated for pilots who retire after January 1, 2005.

The ALPA will not object to the Debtors' efforts to terminate the United Airlines Pilot Defined Benefit Pension Plan. The ALPA will waive any claim that the termination violates its collective bargaining agreement. If the Pilot's Plan is terminated, the Debtors will make additional monthly contributions to the United Airlines Pilot Directed Account Plan of 6% of pilot compensation.

Objections

(1) The Association of Flight Attendants

The Association of Flight Attendants-CWA, AFL-CIO, wants the Court to deny the Debtors' request for approval of the Letter Agreement with the Air Line Pilots Association. The Debtors propose to enforce certain terms of employment on the AFA or face the unraveling of the Letter Agreement, plus the imposition of penalties. As a result, the Debtors will surely bargain with a take-it-or-leave-it strategy. The AFA will be forced to agree to termination of its defined benefit plan or risk complete rejection of its collective bargaining agreement by the Court.

The Letter Agreement prevents the Debtors from engaging in honest bargaining with the AFA or any other employee group. The Debtors cannot bargain meaningfully and in good faith over retention of the Flight Attendants' pension plan if they are required to terminate all defined benefit pension plans. Thus, the Letter Agreement was not negotiated with the AFA, but it affects its members' wages, rules and working conditions.

The Letter Agreement violates the mandate under Section 1113 of the Bankruptcy Code that the Debtors bargain in good faith, Robert S. Clayman, Esq., at Guerrieri, Edmond & Clayman, in Washington, D.C., argues. Good faith is absent in negotiations where one party is already committed to an outcome.

(2) The United Retired Pilots Benefit Protection Association

Throughout these proceedings, the ALPA has stated that it will not represent the Debtors' retired pilots. As a result, the United Retired Pilots Benefit Protection Association was not represented in the negotiations that produced the Letter Agreement. It is inequitable for the Debtors to reduce the URPBPA's members collectively bargained, vested pension rights without allowing them to sit at the negotiating table. The Debtors believe that they can unilaterally terminate the vested pension rights of the URPBPA's members without consulting an authorized representative. This is a violation of Section 1113's requirements, Jack J. Carriglio, Esq., at Meckler, Bulger & Tilson, in Chicago, Illinois, states.

The Bankruptcy Code does not contain a provision that permits a debtor and a union that refuses to represent its retired employees with a mechanism for stripping unrepresented retirees of their vested, collectively bargained pension rights. In contrary, Sections 1113 and 1114 mandate that active and retired employees should be afforded procedural and substantive protections before their collectively bargained rights are taken away. Indeed, other employee groups are being given replacement plans, convertible notes, profit sharing and other benefits to ameliorate the hardships caused by the Letter Agreement, while the retired pilots have been offered nothing. These funds could be used to create a package for the retired pilots.

(3) The Pension Benefit Guaranty Corporation

While the Debtors proclaim that they can no longer afford the pilot's pensions, they ask the Court to approve a new set of promises at the expense of the federal government, other employees and creditors, Jeffrey B. Cohen, Pension Benefit Guaranty Corporation Deputy General Counsel, in Washington, D.C., tells Judge Wedoff.

The Letter Agreement does far more than provide labor cost savings, as it sidesteps the Employee Retirement Income Security Act's safeguards against abuse of termination. The Debtors presented the Letter Agreement to the Court under Section 363 as a typical settlement of a collective bargaining agreement. Nothing could be less typical, as the Letter Agreement upsets a carefully crafted statutory scheme while negotiating away the rights of third parties, like the PBGC and the Debtors' other unions. The Court should see the Letter Agreement for what it is -- an attempt to exploit the termination insurance program.

Mr. Cohen reminds parties that 29 U.S.C. Section 1341 limits a debtor's ability to terminate a pension plan by imposing strict tests before termination is authorized. The termination requirements must be satisfied on a plan-by-plan basis. Mr. Cohen asserts that the Debtors bypass the procedures for each of the pension plans by bundling them into a package deal. In other words, the Debtors seek distress terminations of all the pension plans before filing a request to terminate any of the pension plans.

The Letter Agreement mandates that any plan of reorganization supported by the Debtors must issue $550,000,000 in Convertible Notes to a trust established by the ALPA for eventual distribution to pilots. This mechanism diverts $550,000,000 to the pilots that should go to the PBGC for the unfunded pension liabilities that the Debtors will owe to the PBGC upon the termination of the pilots' plan. Plan participants, like the pilots, have no direct claims against their employer for unguaranteed benefits. When a pension plan is terminated, only the PBGC owns claims for unfunded benefit liabilities against the employer and its controlled group. Issuance of consideration to plan participants, with the intention of mitigating damage to a pension fund, is an improper diversion of value away from the PBGC, which is rightfully entitled to the compensation.

(4) The International Association of Machinists

Sharon L. Levine, Esq., at Lowenstein Sandler, in Roseland, New Jersey, on behalf of the International Association of Machinists and Aerospace Workers, says that while the "IAM applauds ALPA and the Debtors' quest to reach a consensual resolution of the Section 1113(c) issues, it objects in the strongest terms" to the Letter Agreement's status as a sub rosa plan. The Bankruptcy Code provides numerous procedural protections to creditors in the development and approval of a plan of reorganization, including the right to receive a detailed disclosure statement and the right to vote on the proposed plan. The Letter Agreement ignores these procedural requirements for plan confirmation. It improperly determines sub rosa material terms of any future plan of reorganization, including a requirement that the Debtors issue $550,000,000 in Convertible Notes to the ALPA upon exit. Additionally, the Letter Agreement increases the pilots' share of any equity distribution to unsecured creditors by $300,000,000.

Potential lenders or investors may balk at the issuance of $550,000,000 in Convertible Notes to one creditor constituency. This represents over a quarter of the $2,000,000,000 in exit financing that the Debtors claim they need to emerge from bankruptcy. The Letter Agreement deprives the Debtors of the ability to negotiate this issue at plan confirmation, which is the appropriate time to debate exit capital structure. The Debtors' restructuring may be hamstrung if a potential lender or investor wants this distribution reduced or eliminated before providing exit financing.

The Letter Agreement precludes any future reorganization plan that funds any of the Debtors' defined benefit pension plans or a capital structure for the Reorganized Debtors with which the ALPA disagrees. Failure to abide by these terms will result in a financial penalty to the ALPA in the form of an administrative claim for double the amount of cash savings realized by the Debtors. The cumulative effect of these provisions is to settle material terms of the Debtors' reorganization plan now, before any plan has been formally proposed or a disclosure statement filed. This is sufficient reason to deny the Debtors' motion.

(5) The Aircraft Trustees

In the guise of an ordinary transaction, The Bank of New York and Wells Fargo Bank, as Trustees for various aircraft financing transactions, note that the Debtors will provide the ALPA with a potential financial windfall. Specifically, the Agreement would give the ALPA an allowed administrative claim, under Section 503(b), equal to twice the cash savings realized by the Debtors from the Effective Date through the earlier of termination of the Letter Agreement or exit from Chapter 11. This administrative claim would be extinguished upon the Effective Date of a plan that complies with the Letter Agreement in all material respects. This provision is designed to provide the ALPA with an administrative claim if the Debtors are liquidated.

James E. Spiotto, Esq., at Chapman and Cutler, in Chicago, Illinois, asserts that an administrative claim for double the cash savings, without regard for the claims of other creditors, is not permitted under Section 503(b). The wage and benefit modifications may help alleviate the financial burdens that the Debtors are facing. However, the proposed claim is not valid because it bears no relationship to any benefits to the estate. The modifications to the ALPA collective bargaining agreement are not actual and necessary costs of the estates, and therefore, are not administrative expenses. If the ALPA is entitled to an administrative claim, it should be in the amount that is realized as a benefit to the estate.

a) the Court does not approve the Letter Agreement by January 13, 2005;

b) there is no final order prohibiting the Debtors from terminating the pilots' "A" plan;

c) the Debtors fail to terminate the defined benefit plans of any other union;

d) the Debtors fail to implement at least $500,000,000 in annual cash savings with unions and other employees by January 31, 2005;

e) the Court impairs or terminates the Debtors' exclusive right to file a plan;

f) there are provisions in a plan that are not consistent with the Letter Agreement or the ALPA collective bargaining agreement; and

g) a viable plan proposes or confirms a capital structure or ownership structure that is not acceptable to the ALPA.

These provisions, Mr. Jacobson says, essentially grant the ALPA a veto power over the future course of these proceedings and any plan of reorganization. This is an extraordinary power for any particular group to hold over the plan process. The proposed structure may chill creative or alternative approaches for facilitating the Debtors' exit from bankruptcy.

The Debtors should be open to exploring the most effective means to maximize value for creditors, whatever form the plan might take. Instead, the Debtors have opted for an arrangement that scares off resourceful, innovative or unexplored financial possibilities. The Court should deny the motion.

* * *

At a hearing Friday morning in Chicago, Judge Wedoff denied the Debtors' request to enter into a letter agreement with the Air Line Pilots Association.

Judge Wedoff said the Letter Agreement would "unduly tilt the bankruptcy process," according to a report from Dave Carpenter at the Associated Press.

Kevin Orland at Bloomberg News reports Judge Wedoff made his decision with extreme reluctance but held that the Letter Agreement improperly gave the ALPA veto power over the Debtors' negotiations with the other labor unions.

ALPA Disappointed

The bankruptcy court rejected on Jan. 7, an historic pilot agreement that would permit the Company to emerge from Chapter 11. "We are disappointed with the judge's ruling and even more disappointed with the objections of the creditors and others who prompted the ruling," the United Master Executive Council of the Air Line Pilots Association said in a statement.

"The court's decision affirms the substance of the pilot agreement over the objections of other creditors but states that certain legal aspects of the agreement may be inconsistent with the requirements of the bankruptcy code. We will promptly review the judge's decision with the United Master Executive Council, the governing body of United pilots union.

"While we intend to meet with the Company over the next few days to explore the consequences of the judge's decision, there can be no assurance that the parties will reach another settlement. In addition, any further agreements with United on this matter will be subject to review and decision by the full United Master Executive Council and, in all likelihood, to an additional membership ratification vote.

"One thing will remain certain and steadfast as we consider the consequences of [Friday]'s decision. The pilots of United Airlines are committed to the success of our company, but we will not participate in any restructuring of the airline in which our pensions or our contract are unfairly sacrificed for the benefit of any other group in this case."

Flight Attendants Pleased

The bankruptcy court rejection of the United Airlines contract agreement with its pilots demonstrates that UAL management needs to take a different approach in its efforts to restore the troubled airline to solvency, officials of the Association of Flight Attendants-CWA said.

"This decision indicates that United Airlines management is wrong in trying to pit one employee group against another," said Greg Davidowitch, president of the AFA's United Master Executive Council. "We're obviously pleased that the court has declared that he would not accept any agreement that would be tied to the elimination of any other union's pensions."

Mr. Davidowitch pointed out that AFA already had a proposal on the table that would yield the savings that UAL is seeking. AFA has forcefully opposed the elimination of the flight attendants' pension. "The court has clearly signaled that the airline should work with each employee group separately, giving each individual union the leeway to construct contracts tailored to its own members' needs," he said. "We hope this ruling convinces United that it should take a new look at our contract proposal."

Patricia Friend, AFA's international president, also urged United management to negotiate individually with its unions, "instead of resorting to gamesmanship in the bankruptcy courts."

"Flight attendants have demonstrated an enormous amount of good faith in working to help struggling airlines like United and US Airways," she said. "It's wrong for the company to try to impose its will on employees through an abusive use of the courts. This case shouldn't even be in court; it should be dealt with in good faith at the negotiating table. We've shown at US Airways we can get it done in a consensual manner."

More than 46,000 flight attendants, including 21,000 at United, join together to form AFA, the world's largest flight attendant union. AFA -- http://www.unitedafa.org/-- is part of the 700,000 member strong Communications Workers of America, AFL-CIO.

Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No.72; Bankruptcy Creditors' Service, Inc., 215/945-7000)

UAL CORP: Asks Court to Clarify Terms of Deloitte's Engagement--------------------------------------------------------------UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois to clarify the Order that approved their employment of Deloitte & Touche as auditors, accountants and tax services providers.

On the Petition Date, Deloitte was retained to provide various tax services, including certain property tax services, tax compliance services, bankruptcy tax computation, analysis services, and expatriate tax services. Subsequently, Deloitte reorganized its business units, including the tax services unit. The reorganization aligned Deloitte's organizational structure more closely with its businesses. Deloitte will continue to provide the Debtors with accounting and auditing services. However, as of August 22, 2004, Deloitte Tax LLP began providing tax services to its clients, including the Debtors. Deloitte Tax is an affiliate of Deloitte.

The Debtors want to modify the scope of services provided by Deloitte & Touche LLP to eliminate the Tax Services, which, since August 22, 2004, have been provided by Deloitte Tax. Deloitte & Touche LLP is no longer providing the Tax Services, so it makes no sense that it should continue to be retained for these services. Moreover, it is not necessary to separately retain Deloitte Tax to provide the Tax Services, since they do not involve the Chapter 11 cases. Accordingly, Deloitte Tax is not a "professional" under Section 327 of the Bankruptcy Code.

Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No.71; Bankruptcy Creditors' Service, Inc., 215/945-7000)

Warner Chilcott's internal sources of liquidity comprise cash and free cash flow, both of which Moody's believes are somewhat limited. Following the leveraged buyout transaction, Moody's expects the company will have very modest (e.g. $20-$40 million) of cash on hand, which is low compared to other specialty pharmaceutical companies. Moody's anticipates Warner Chilcott will generate free cash flow (after capital expenditures and contingency payments to third parties) in the range of $75-$100 million over the twelve months ending December 31, 2005. This places the company's ratio of free cash flow to adjusted debt in the 3-5% range over the next four quarters, which Moody's believes is slim compared to other specialty pharmaceutical companies.

Warner Chilcott maintains a $150 million revolving credit facility, which Moody's expects will remain undrawn following the close of the transaction. Because of the modest free cash flow and cash on hand, Moody's believes the revolver size at $150 million appears modest. The primary financial covenants are minimum interest coverage and maximum leverage. At close, Moody's expects that the company will have a comfortable cushion under these covenants. In the future, however, it is possible the company may not be able to access the full $150 million without tripping its covenants.

Warner Chilcott's assets are essentially encumbered, as most assets serve as security in the new transaction, thereby leaving few monetizeable assets to provide alternate sources of liquidity.

The Company is a marketer and developer of branded pharmaceutical products focused on the U.S. women's healthcare and dermatology markets. The company reported $490 million in revenues in for the fiscal year ended September 30, 2004.

WESTPOINT STEVENS: Closes Facilities & Reduces Workforce--------------------------------------------------------WestPoint Stevens (OTC Bulletin Board: WSPTQ) said it will realign and consolidate its Bed Products manufacturing capacity in 2005 with the closing of its Alamance Plant and Distribution Center, Burlington, N.C., Clemson (S.C.) Fabricating and Greige plants and Distribution Center and Middletown (Ind.) Plant, as well as a reduction of more than 50 percent of its Clemson Finishing Plant workforce. The Company's Bath Products manufacturing capacity will also be consolidated with the closing of its Drakes Branch (Va.) Plant.

These closings and workforce reduction are directly related to the removal of textile quotas from low-wage countries. While some of the production at these locations will be shifted to other Company facilities, a significant amount will now be sourced from other countries.

"This is another move in our ongoing strategy of adjusting as necessary to meet the challenges of doing business globally," said WestPoint Stevens President and CEO M.L. (Chip) Fontenot. "We must be flexible in maintaining the most profitable balance between our domestic manufacturing and goods sourced from overseas. This becomes more critical with quotas removed.

"This restructuring will strengthen the Company, with better-aligned capacity and greater freedom to market in a cost-efficient way those products most in-demand. Our goal, of course, is to ensure the Company's growth and profitability in a global economy," he emphasized.

At Clemson Finishing Plant, some 245 jobs will be eliminated. Preparations for shutdowns at the individual facilities will get under way this month for an anticipated closing in late March or early April. Likewise, the workforce reduction at Clemson Finishing is expected to be completed by this time.

"We deeply appreciate the associates at these locations - indeed all our associates," said Mr. Fontenot. "Their skills and perseverance over the years have made WestPoint Stevens a leader in our industry, and we sincerely regret that this restructuring is made necessary by today's global marketplace, where so many of our products can be produced much less expensively in countries other than the U.S."

As in past closings and workforce reductions, WestPoint Stevens will apply by individual facility for assistance for laid-off associates from the Trade Act of 1974. In areas where affected plants are located near other WestPoint Stevens facilities, the Company will attempt to place laid-off associates in jobs at the other plants.

Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts.

YUKOS OIL: Gets Interim Okay to Maintain Existing Bank Accounts---------------------------------------------------------------As previously reported, Yukos asks the United States Bankruptcy Court for the Southern District of Texas for authority to:

(a) designate, maintain and continue to use any or all of the existing Bank Accounts in the names and with the account numbers existing immediately prior to its Chapter 11 case; provided, however, that it reserves the right to close some or all of its prepetition Bank Accounts and open new debtor-in-possession accounts;

(b) deposit funds in and withdraw funds from any accounts by all usual means including, but not limited to, checks, wire transfers, automated clearing house transfers, electronic funds transfers, and other debits;

(c) treat its prepetition Bank Accounts and any accounts opened after the Petition Date for all purposes as debtor- in-possession accounts.

Yukos also seeks permission to continue utilizing its existing cash management system including, without limitation, waiving any requirement that it establish separate accounts for cash collateral or tax payments. Yukos intends to pay costs or expenses associated with the maintenance of the cash management system.

* * *

The Court granted the Debtor's request on an interim basis.

Headquartered in Houston, Texas, Yukos Oil Company -- http://www.yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. (Yukos Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000)

* Alvarez & Marsal Adds Eight Tax Advisory Services Directors -------------------------------------------------------------Alvarez & Marsal, a global professional services firm, said it has expanded its tax advisory business, known as Alvarez & Marsal Tax Advisory Services, LLC, with the addition of eight veteran tax professionals who have joined as Managing Directors. A&M also said it has opened a new office in Washington, D.C., bringing the firm's global presence to 17 locations.

Thomas Aiello, a former tax partner with Arthur Andersen, and James Eberle, a former tax partner with KPMG and Arthur Andersen, joined the firm as Managing Directors in the Washington, D.C. tax practice. The Houston tax practice added two new Managing Directors: Craig Beaty, a former tax partner with Ernst & Young, and Lynn Loden, formerly with Deloitte and Arthur Andersen. In addition, four Managing Directors have joined the West region's tax practice. Brian Pedersen, formerly a tax partner with KPMG and Arthur Andersen, joined the firm in Seattle. Martin O'Malley, a former tax partner with PricewaterhouseCoopers and Arthur Andersen, joined the firm in Silicon Valley. Anthony Fuller and Melody Summers, both of whom previously worked in the tax practices of Arthur Andersen and Deloitte, also joined the firm in San Francisco.

"The need for management teams and boards of directors to maintain independence from their auditors has led to increased scrutiny of tax services provided by an audit firm. This need for independent tax advisors has begun to spur an exodus of senior tax professionals from Big Four accounting firms," said Bob Lowe, CEO of Alvarez & Marsal Tax Advisory Services, LLC. "Since launching Alvarez & Marsal Tax Advisory Services earlier this year, we continue to attract the industry's leading tax professionals who are excited by the opportunity to work with a multidisciplinary firm that does not and will not perform audits. Since we will not offer audit services, our Managing Directors will not be faced with the types of independence conflicts that hinder a Big Four firm tax partner's ability to serve clients. We are honored that these eight outstanding individuals have chosen to join our growing team."

Mr. Aiello spent more than 30 years with Arthur Andersen where he held several leadership positions including Managing Partner for the National Federal Business Tax Practice and Regional Managing Director of Tax for the Southeast Region. He has extensive experience advising real estate companies and closely-held businesses in all phases of development and assisting clients in growing first-class construction or real estate investment businesses. Immediately prior to joining A&M, Mr. Aiello founded Aiello & Associates, an independent tax consulting firm focused on the real estate industry. A graduate of Stetson University, he earned a J.D. from Georgetown University Law Center.

With over 25 years of tax advisory experience, including 12 years focused on research and experimentation credit consulting, Mr. Eberle has conducted large scale research and experimentation studies ranging from credit feasibility to audit defense and litigation support in a number of industries, including aerospace, automotive, defense, internet, telephony, and pharmaceutical. In addition, he has led long-term contract accounting method reviews and tax litigation assistance engagements. Prior to joining A&M, Mr. Eberle led the Research Tax Credit Services practices of KPMG and Arthur Andersen. Mr. Eberle has worked with various taxpayer coalitions in crafting regulatory comments for consideration by the IRS and Treasury Department. He received a bachelor's degree in Accounting from the University of Missouri.

Mr. Beaty brings more than 20 years of experience advising clients in a range of industries on sales and use tax matters, including reverse audits, audit management and controversy, event-based tax planning, tax process improvement, and accounts payable recovery. Prior to joining A&M, Mr. Beaty was a partner with Ernst & Young where he led the Sales and Use Tax consulting practice for the Gulf Coast region. Earlier in his career he served as an auditor and supervisor with the Texas Comptroller of Public Accounts. Mr. Beaty earned a bachelor's degree in Accounting from Stephen F. Austin State University.

With over 26 years of experience, Mr. Loden has served clients in several industries, including energy, utilities, oil field services, real estate, commercial services, transportation, and financial services. He has advised public and private buyers and sellers on tax aspects of mergers and acquisitions, IPOs, spin-offs, joint ventures and bankruptcy. He has also advised clients on domestic and cross-border tax issues of leasing and similar structured finance transactions involving diverse asset types. Prior to joining A&M, Mr. Loden was with Deloitte where he served as a member of Deloitte's national SFAS No. 109 Competency Team. Previously, Mr. Loden was a tax partner with Arthur Andersen where he was a member of Andersen's team focused on corporate taxation and the firm's national technical reviewer of leasing transactions. Mr. Loden received a B.B.A. in Accountancy from the University of Mississippi. He is a frequent speaker on tax issues at various business forums.

Mr. O'Malley brings more than 25 years of tax advisory experience primarily serving technology companies in Silicon Valley. He advises clients on corporate income tax matters, including capital formation, cross-border structuring, acquisitions, divestiture, joint ventures, compensation, controversies and compliance. Prior to joining A&M, Mr. O'Malley was a tax partner with Pricewaterhouse Coopers and Arthur Andersen. He led Andersen's Silicon Valley Tax Practice for seven years. Mr. O'Malley earned a Bachelor of Science Degree in Business Administration from Georgetown University.

Mr. Pedersen has 20 years of experience advising clients on multi-state income tax, sales and use tax, and property tax matters. He has served clients throughout the Pacific Northwest and the United States in the telecommunications, high-tech and retail industries. Prior to joining A&M, Mr. Pedersen was a tax partner with KPMG and Arthur Andersen in Seattle. He was the National Partner in Charge of Income and Franchise Tax for KPMG. He also led Andersen's State and Local Tax practice for the Pacific Northwest Region. Mr. Pedersen graduated from the University of Montana with a Master's Degree in Business Administration and a Bachelor of Arts in Political Science. He is a frequent speaker on multi-state tax issues.

Mr. Fuller advises clients in a diverse array of industries on state and local tax matters with an emphasis on income taxes for multi-state corporations and pass-through entity structures. His experience includes representing clients in controversies before various state taxing authorities, strategic tax planning, restructuring, mergers and acquisitions consulting, due diligence, and tax compliance. Prior to joining A&M, Mr. Fuller spent more than 11 years with Deloitte and Arthur Andersen. He earned a J.D. from the University of California, Davis and a bachelor's degree from the University of Colorado, Boulder.

Ms. Summers advises clients on federal tax matters that impact business strategies. She has advised a broad client base, including clients in the real estate, financial services, agricultural and manufacturing industries. Prior to joining A&M, Ms. Summers spent more than 12 years with Deloitte and Arthur Andersen. She obtained a J.D. from Santa Clara University School of Law and a bachelor's degree in Managerial and Agricultural Economics from the University of California, Davis.

A&M's Tax Advisory Services include: consulting on federal, international, and state and local tax matters; advising on tax aspects of mergers, acquisitions and dispositions; and providing tax advocacy services.

Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses and organizations in the corporate and public sectors navigate complex business and operational challenges. With professionals based in locations across the U.S., Europe, Asia, and Latin America, Alvarez & Marsal delivers a proven blend of leadership, problem solving and value creation. Drawing on its strong operational heritage and hands-on approach, Alvarez & Marsal works closely with organizations and their stakeholders to, implement change and favorably influence results. The firm's range of service offerings includes Turnaround Management Consulting, Crisis and Interim Management, Creditor Advisory, Financial Advisory, Dispute Analysis and Forensics, Real Estate Advisory, Business Consulting and Tax Advisory. For more information about the firm, please visit www.alvarezandmarsal.com or contact Rebecca Baker, Chief Marketing Officer at 212.759.4433.

* H. Slayton Dabney Joins King & Spalding as New York Partner-------------------------------------------------------------King & Spalding LLP, a leading international law firm, said that H. Slayton "Slate" Dabney, Jr., a commercial bankruptcy authority with 20 years of experience in the field, has joined the firm's 180-lawyer New York office as partner. Mr. Dabney brings an extensive background handling major Chapter 11 cases and other bankruptcy proceedings to the firm's financial restructuring practice group.

"Slate's experience handling complex bankruptcy matters further expands our ability to resolve our clients' bankruptcy-related challenges," said Michael J. O'Brien, managing partner of the firm's New York office. "We are proud to welcome him to the firm and look forward to his contributions as we continue to grow our New York office."

Mr. Dabney joins King & Spalding from McGuireWoods LLP, where he had practiced since 1974. Since 1985 he has practiced in the area of commercial bankruptcy and corporate restructuring. He has served as debtor's counsel, co-counsel and committee counsel in many large Chapter 11 cases and represents Fortune 500 companies on a national basis in bankruptcy proceedings involving their major accounts and contractual relationships. He also frequently represents clients in the acquisition of assets from companies that are in financial distress. He earned a B.A. from the University of Virginia and a J.D. from the University of Virginia School of Law.

King & Spalding's 30-lawyer financial restructuring group, based in New York and Atlanta, is one of the nation's preeminent financial restructuring practices and is frequently ranked among the most active in the nation by industry publications. The firm's lawyers are regularly retained in large bankruptcy matters and workouts to represent debtors, trustees, creditors' committees, institutional lenders, other critical creditors and parties-in- interest, and potential acquirers of businesses and large assets.

"King & Spalding's reputation for really learning and understanding its clients' needs and business objectives is second to none, and its financial restructuring group is one of the top in the nation," said Mr. Dabney. "I am excited to be joining such a well respected firm and look forward to contributing to the growth of the financial restructuring practice and the New York office."

King & Spalding LLP is an international law firm with more than 800 lawyers in Atlanta, Houston, London, New York and Washington, D.C. The firm represents more than half of the Fortune 100, and in a Corporate Counsel survey in October 2004 was ranked one of the top ten firms representing Fortune 250 companies overall. For additional information, visit http://www.kslaw.com/

Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities.Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test.

A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com.

Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today.

Monthly Operating Reports are summarized in every Saturday edition of the TCR.

For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852.

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